SUPERIOR COURT OF JUSTICE – ONTARIO

COMMERCIAL LIST

RE: Romspen Investment Corporation, Applicant

AND:

6176666 Canada Ltée., Respondent

BEFORE: D. M. Brown J.

COUNSEL: L. Corne, for the Receiver

HEARD: March 14, 2012

REASONS FOR DECISION (corrected)

I. Just how broken is the document management system of the Superior Court of Justice?

[ 1 ] I suppose that on a sunny, unusually warm, mid-March day one should be mellow and accept, without complaint, the systemic failures and delay of this Court’s document management system. The problem is that from the perspective of the members of the public who use this Court, delays caused by our antiquated, wholly-inadequate document management system impose unnecessary, but all too real, costs on them. And yet the entity that operates that part of the Court’s administration system – the Court Services Division of the Ministry of the Attorney General – seems completely indifferent to the unnecessary costs it is causing to the members of the public who use our Court.

[ 2 ] Let me tell a little story. It is not an unusual story. Indeed, it is a common story in this court. But the story illustrates an important point, a point which judges, as the ultimate stewards of the health of our system of justice, must be vigilant in keeping on the radar screens of those who hold the purse strings of this Court’s administration system.

[ 3 ] Romspen Investment Corporation lent money to 6176666 Canada Ltée. (“617”) to develop and construct a 25-unit residential condominium project in the Glebe neighborhood of Ottawa. The loan went sour; this Court appointed SF Partners Inc. as receiver and manager of 617 back in late 2009.

[ 4 ] The Receiver commenced a process of completing and marketing the condo units. As part of that process it secured independent appraisals of certain sizes of condo units in the project. The Receiver filed those appraisals, on a confidential basis, when it moved before Pepall J. on June 3, 2010 for approval of the sale of one unit. By her order of that date Pepall J. sealed the filed appraisals. The Receiver intended to refer to those sealed appraisals on subsequent motions to approve the sale of other condo units.

[ 5 ] One such motion came on before me today. The sale of the unit is scheduled to close tomorrow, March 15, 2012. In its Seventh Report dated March 9, 2012, the Receiver referred to the fact that appraisals previously had been filed with this Court and sealed by order of Pepall J. and then continued, in paragraph 17 of its Report:

The Receiver has compared the Appraisal of a similar sized unit with the subject unit and considers the price under the APS to be comparable to the appraised value.

[ 6 ] I read that Report this morning when preparing for the motion. The Receiver, understandably, had not filed additional copies of the sealed appraisals which it had previously left with the Court. One would think that a member of the public using this Court could reasonably assume that sealed appraisals which would be referred to on repeated motions to approve the sale of condo units would be readily available for use on those further motions. Of course, reasonable assumptions play no role in how documents are managed in our Court’s system.

[ 7 ] So, how did the morning in court unfold? I stood this matter down to the end of my list, anticipating the inevitable delays. Receiver’s counsel confirmed that appraisals had been filed and sealed, but she did not have additional copies with her at hand. A two-track process then unfolded. I directed my staff to go over to the office which holds sealed documents. I say “go over” because judges of the Commercial List sit at 330 University Avenue, whereas sealed documents for Commercial List matters are kept, in the ordinary course, at 393 University Avenue. My CSO duly went across the street, waited until the responsible person was back from a break, ultimately retrieved the documents, and brought them back over. Elapsed time? One hour.

[ 8 ] At the same time Receiver’s counsel had contacted her office and her assistant was able to locate copies of the appraisals which had been filed and brought them up to court. Elapsed time? One hour. A tie of sorts.

[ 9 ] And the consequences of that one hour delay? On my part, none. I walked across the plaza, picked up a latte at Starbucks, came back and continued working on a reserve from yesterday. A most mellow approach, but I have learned that as matters presently stand one cannot fight the City Hall bureaucracy that is the Court Services Division of the Ministry of the Attorney General.

[ 10 ] But the consequences to the litigant, the court-appointed receiver? A delay of one hour, involving the expenditure of additional counsel time, higher legal fees, an increase in the expenses of administering the receivership, and a consequent reduction in the net recovery for the creditors of the project.

[ 11 ] Alternatives? Well, I suppose one could say that both judge and litigant’s counsel should have anticipated a problem and acted to avoid it. Let me say in my defence that while my usual practice is not to leave my office until I have reviewed the next day’s files, yesterday was a long sitting day and, when coupled with drafting some reasons, I was not able to complete yesterday’s work until 7 p.m. Mea culpa – I went home for dinner. When I reviewed the file at 8 a.m. this morning, I identified the difficulty, but with a 9:30 start to my lists, and the timing of the arrival of court staff, I knew nothing could be done as a practical matter until the case was called.

[ 12 ] So what about Receiver’s counsel? I suppose counsel could not go wrong by always operating on the basis that this Court’s document management system will fail and always bring duplicate copies of everything. But, one must ask, why should those who use our public courts have to act on the assumption that whatever they did before, whatever they filed before, will go for naught? Hardly what one would describe as cost-efficient access to justice.

[ 13 ] The real solution? Consign our paper-based document management system to the scrap heap of history and equip this Court with a modern, electronic document system.

[ 14 ] A warm, sunny day like today perhaps allows one to dream a bit. What if our Court had an electronic case management system which recorded, as a matter of course and without the need for extraordinary judicial direction, that certain documents had been filed and sealed in a proceeding, so that when the matter returned for further hearing an electronic flag would pop up alerting court staff that sealed documents might be required for a hearing?

[ 15 ] And what if our Court had a system under which documents were filed electronically and accessible to judges and others through a web-based system, with sealed documents specially encrypted to limit access to judges only?

[ 16 ] Yes, Virginia, somewhere, someone must have created such a system, and perhaps sometime, in an another decade or so, rumours of such a possibility may waft into the paper-strewn corridors of the Court Services Division of the Ministry of the Attorney General and a slow awakening may occur.

[ 17 ] If some may consider such criticism un-judicial in tone, I make no apology for the language used. The state of this Court’s document management and case scheduling systems is a scandal, and the poor excuse of a system which currently is employed should be subject to relentless criticism – judicial and otherwise - until it is discarded and the people of this province are provided by the provincial government with a court administration system of a quality which they deserve.

II. Motion to approve the sale of the condo unit

[ 18 ] The principles governing this motion for the approval of the sale of the condo unit and a vesting order are those set out in Royal Bank of Canada v. Soundair Corp.. A court should consider:

(1) whether the receiver has made a sufficient effort to get the best price and has not acted improvidently.

(2) the interests of all parties.

(3) the efficacy and integrity of the process by which offers are obtained.

(4) whether there has been unfairness in the working out of the process.[^1]

A court should reject the recommendation of a receiver based on such judgment only in the most exceptional circumstances.[^2]

[ 19 ] In the present case the Receiver followed a sales and marketing program previously accepted by this Court. As described in the Receiver’s Seventh Report, the proposed sale of the condo unit is at a price in excess of the appraised value for units of such size.

[ 20 ] The Receiver filed proof of service of the motion on those on the Service List. No interested party opposed the relief sought. The form of approval and vesting order followed the Model Order of this Court.

[ 21 ] I was satisfied that the proposed sale met the criteria set out in Soundair, approved the sale, and signed the approval and vesting order.

[ 22 ] I further order that the appraisals previously sealed pursuant to the order of Pepall J. be resealed and that the Commercial List Office staff:

(i) keep the sealed appraisals on site here at 330 University so that they are available for use on the next approval motion, which I understand may occur next week; and,

(ii) make whatever entries can be made in the old FRANK case information system that the sealed documents should be retrieved and made available to the judge hearing any further sale approval motions.

D. M. Brown J.

Date: March 14, 2012

[^1]: Ibid., para. 16. Crown Trust Co. v. Rosenberg (1986), 60 O.R. (2d) 87 (H.C.J.), para. 12.
[^2]: Crown Trust, supra., paras. 80 and 81.