SUPERIOR COURT OF JUSTICE – ONTARIO

COMMERCIAL LIST

RE: Co-operative Housing Federation of Canada, Applicant

AND:

Bridlewood Co-operative Inc., Superintendent of Financial Services, and United Communities Credit Union Limited, Respondents

BEFORE: D. M. Brown J.

COUNSEL: H. Chaiton and D. Bourassa, for the Receiver, MNP Ltd. B. Alexander and M. Klippenstein, for the Applicant E. Savas, for the Respondent, Bridlewood Co-operative Inc. S. Scharbach, for the Respondent, Superintendent of Financial Services D. Swift, for the Respondent, United Communities Credit Union

HEARD: October 16, 2012

REASONS FOR DECISION

I. Receiver’s motion to approve a sale

[1] MNP Ltd., the court-appointed receiver and manager of the assets, undertaking and properties of Bridlewood Co-operative Inc., moved for approval of an agreement of purchase and sale with HPNP Non-Profit Homes Inc. for the sale of Bridlewood’s property and assets, together with related orders.

[2] For the reasons set out below, I grant the Receiver’s motion and approve the HPNP sale transaction.

II. Background

[3] Bridlewood is a non-profit housing co-operative incorporated in 1975 under the Ontario Co-operative Corporations Act. Bridlewood owns 131 single-family dwelling residential units in a development located in the Town of Essex, about 30 kilometres east of Windsor, Ontario.

[4] By order made June 22, 2011, Newbould J. appointed MNP as receiver and manager over the assets and undertaking of Bridlewood. The background to that order can be found in the following excerpts from the reasons of Newbould J.:

[3] CHF Canada is a federal non-profit co-operative whose purpose is to assist non-profit housing co-operatives in Canada. Approximately 91% of Ontario's 559 non-profit housing co-operatives have joined CHF Canada…

[4] Bridlewood unfortunately has been the subject of much litigation…

[5] Bridlewood was initially financed by a CMHC mortgage loan at less than market rates and since then obtain further taxpayer-funded assistance through CMHC in the form of an interest reduction on the mortgage and a 10% mortgage forgiveness. In 2004 Bridlewood refinanced its property by paying out the CMHC mortgage and replacing it with a fixed term mortgage loan from the credit union of approximately $6 million. Until September 2010, Bridlewood made all payments required to keep the mortgage current, including monthly payments of approximately $39,000. However, Bridlewood was late in making its monthly payment for October 2010, which was not paid until December 20, 2010, and it did not make subsequent payments from November 2010 to May 20, 2011. As a result of a motion brought by CHF Canada for interim relief in this application, Bridlewood paid arrears of $273,443.87 on June 10, 2011.

[6] Since 1996, Bridlewood has taken steps on several occasions to transfer its housing units to its members at sale prices substantially less than their fair market value. This has occurred on a least four separate occasions. The steps included calling board and general members’ meetings to pass resolutions for permission to take such steps, consulting appraisers, accountants, engineers and lawyers and incurring significant expense in doing so. The change of mortgage financing from CMHC to financing with the credit union would allow replacement of that financing with individual homeowners mortgages.

[7] In the course of 2005 litigation, a representative home was appraised at $127,000. That same unit was appraised by MPAC at $122,000 in 2005, $126,000 in 2008 and $129,000 in 2011. Bridlewood's proposals to sell the units to members involved proposed sales in 1996 for $40,000, in 2005 for $51,000, in 2007 for between $66,200 and $71,000 and in 2008 for $55,000. Selling units to its members at below market value would be contrary to the Act. However well-intentioned the directors may have been in taking the steps they did, and I make no finding one way or the other on that score, the steps taken with a view to selling units below market value appear clearly be a breach by the directors of Bridlewood of their duties under section 108 of the Act. Any sale of property to a member at less than market value would be a breach of section 171.2 of the Act which provides that a non-profit housing co-operative shall not distribute or pay any of its property to its members during its existence or on its dissolution.

[8] If February 2011, the Superintendent learned that Bridlewood had stopped paying its mortgage in November 2010. Consequently the Superintendent appointed an inspector under section 148 of the Act to investigate and report on the affairs and management of Bridlewood. The inspector concluded that Bridlewood's monthly expenses were less than its revenue, that Bridlewood had utilized its replacement fund as working capital and consequently has no replacement fund and is facing significant repair costs. The inspector concluded that Bridlewood had not attempted to recover the shortfall by increasing occupancy charges which had remained unchanged for several years and that the current occupancy charge was financially unsustainable… The evidence of the housing charges compared to CPI increases and market

[9] The Superintendent has concluded that Bridlewood’s fundamental problem is one of governance that needs to be addressed by the court.[^1]

[5] By order made April 24, 2012, Morawetz J. approved a marketing and sale process for the Bridlewood property. In his order Morawetz J. stated that “the process shall include the Receiver entertaining any proposals from the Co-operative Housing Federation of Canada…and other co-operative or social housing organizations which would continue to make the houses available as affordable housing…” The order set August 31, 2012, as the bid deadline (the “Deadline”).

[6] As described in detail in its Second Report, thereafter the Receiver conducted a thorough, standard marketing and sales process, including the preparation of a Confidential Information Memorandum. The Receiver also provided residents of Bridlewood with written updates about the sales process; a Townhall meeting also was held.

[7] Almost 150 parties expressed interest in the Property. The Receiver distributed the CIM to 124 parties who had executed confidentiality agreements. The Receiver also sent around a survey to Bridlewood’s members. About 50% (54) of them responded. Of that group 37 (69%) indicated they would submit an offer. Some members responded that they were willing to pay more than their current monthly occupancy charge of $560.00.

[8] Prior to the August 31, 2012 Deadline MNP received 77 offers:

(i) Two offers were made on an en bloc basis for all 131 houses by HPNP Non-Profit Homes Inc. and Marlin Centre Mobile Homes Inc.;

(ii) 77 offers were made for individual houses. Sixty-four (64) current Bridlewood members submitted offers for houses. A group offer involving 29 members attached the condition that each of their offers had to be accepted, otherwise all their offers would be null and void

[9] On September 21, 2012, the Receiver served its motion record seeking approval of an agreement of purchase and sale it had entered into with HPNP. In its Second Report the Receiver disclosed all the terms of the bids it had received.

[10] The motion initially was returnable on September 28, 2012. Counsel for Bridlewood and counsel for some individual members requested an adjournment to afford them time to file responding materials. Cumming J. granted an adjournment until October 16, on terms, including (i) the delivery of responding materials by October 4 and (ii) authorizing the Receiver to serve notice of a November 1 monthly occupancy fee increase from $560.00 to $875.00. In the result, no responding evidence was filed by Bridlewood or its members, although Bridlewood did file a factum.

[11] That does not end the story. On Friday, October 5, Bridlewood’s counsel served an undated petition signed by 70 members in which they confirmed that:

should the base occupancy charge be increased from $560.00 to $875.00 per month, I will be forced to seek alternate housing that has a cost that is consistent with the current costs of occupying my home in Bridlewood Cooperative.

Of the 70 members who signed the petition, 48 had submitted offers to purchase Bridlewood homes. All those offers were submitted on an unconditional basis. On October 9 Receiver’s counsel wrote to Bridlewood’s counsel requesting evidence from the 48 member offerors of their financing commitments. Bridlewood’s counsel responded that he did not act for the individual members.

[12] On October 11, 2012, six weeks after the Deadline, three weeks after disclosure by the Receiver of the terms of all the bids, and two weeks after the initial return date of the Receiver’s sale approval motion, Marlin informed the Receiver of amendments it wished to make to its bid. I will deal later with that revised offer.

[13] The Receiver took the position that I should not consider the post-Deadline revisions submitted by Marlin for its offer and, in any event, it continued to recommend acceptance of the HPNP offer.

III. Positions of the parties

[14] The Receiver sought approval for the HPNP transaction. The Applicant, CHF, supported the Receiver’s motion. The Superintendent took no position, except to state that in its view the offers complied with the Co-operative Corporations Act, including the prohibition against distributing non-profit housing co-operative assets to members.[^2]

[15] Bridlewood opposed the motion and requested that the motion be dismissed. Two members, Gayle Brown and John Gill, addressed the Court at the end of the hearing. Both told me that they could not afford an increase in the occupancy fee to $875. Mr. Gill said he could afford a 10-20% increase in the fee, but not the 56% proposed by the Receiver.

IV. Governing legal principles

[16] The duties of a court when considering a request by a receiver to approve the sale of an asset were set out in Royal Bank v. Soundair Corp.[^3] A court must consider and determine (a) whether the receiver has made a sufficient effort to get the best price and has not acted improvidently, (b) the interests of the parties, (c) the efficacy and integrity of the process by which offers were obtained, and (d) whether there had been unfairness in the working out of the process.

[17] Those general principles apply equally to the sale of co-operative housing property, but a court must be alive to, and take into account, factors specific to co-operative housing as part of its Soundair analysis. As put by the Court of Appeal in York (Regional Municipality) v. Thornhill Green Co-operative Homes Inc.:

I do not think that different general considerations apply when the receivership sale sought to be approved involves a non-profit housing co-operative subject to the provisions of the Co-operative Corporations Act and the Social Housing Reform Act. That is not to say, however, that the special considerations arising in such circumstances are not to be taken into account.

In the course of assessing the receiver’s request for approval, the court will weigh the special factors pertaining to non-profit co-operative social housing, just as it would consider any unique circumstances in any receivership situation. Without seeking to be exhaustive or to provide any particular order, those factors would include such things as (i) the continued viability of the project in its existing form; (ii) the statutory rights of co-operative members under the Co-operative Corporations Act to participate in management and to have greater security of tenure; (iii) the particular impact of legislative or other strictures on the value of the property in question, and (iv) the need to preserve the availability of social public housing, whatever form that vehicle might take. But these factors will fall to be considered under some or all of the four Soundair criteria – the best efforts requirement on the part of the receiver, the interests of the parties, the efficacy and integrity of the process and the existence of any unfairness in the working out of the process. The need to be alive to these special factors does not change the general Soundair principles that normally govern the court’s approval of a receivership sale.[^4]

[18] On a sale approval motion the court must take into account the entirety of the circumstances, including any conduct by a party which prejudices the integrity of the sales process.[^5]

[19] A court should not proceed against the recommendations of its receiver except in special circumstances and where the necessity and propriety of doing so are plain.[^6] If a receiver has acted reasonably, prudently, fairly and not arbitrarily, a court should only proceed contrary to the receiver’s recommendation in exceptional cases.[^7]

IV. Analysis

A. The integrity of the sales process

[20] The evidence disclosed that the Receiver made a sufficient effort to secure the best price for the Property and ran a fair and reasonable sales and marketing process. As noted above, Morawetz J. approved the sale and marketing process recommended by the Receiver. MNP implemented the approved process, including entertaining a proposal from CHF which would continue to make the houses available as affordable housing. Indeed, the bid for which the Receiver seeks approval has been made by HPNP, a special purpose non-profit corporation formed by CHF. The objects of HPNP are to provide housing accommodation “primarily for persons of low or modest income”, and HPNP’s letters patent include the key provisions required for a non-profit housing co-operative under the Ontario Co-operative Corporations Act.

[21] No party suggested that the Receiver had failed to run a fair and reasonable sales process. Although Bridlewood opposed the motion, it did so on the basis that the Receiver’s proposed sale did not take into account adequately the interests of the existing members of Bridlewood. Bridlewood did not, nor could it, point to any unfairness in the sales and marketing process.

B. The offers

[22] Moving past the consideration of the fairness of the sales and marketing process, one must next consider, as part of the review of the prudence of the Receiver’s efforts, which offers the Court should look at. The Receiver submitted that the court only should review the offers received prior to the August 31, 2012 Deadline and should ignore the October 11, 2012 Marlin Revised Offer. Bridlewood submitted that I should consider the Marlin Revised Offer, and it submitted that the Revised Offer was the best offer.

[23] It is time to consider the details of the offers actually received by the Receiver.

[24] At present the amounts owing under secured charges against the Property total about $6 million, consisting of the amount due to the Credit Union under its mortgage ($5.36 million), the Receiver’s Borrowing Charge ($500,000), outstanding taxes and other amounts the Receiver must pay ($96,000), and the Receiver’s fees.

B.1 Offers received before the bid Deadline of August 31, 2012

[25] The 75 offers submitted to the Receiver for individual houses would result in total sale proceeds of $5.968. The Receiver noted that most of the offers were at prices well below the appraised values of the houses. The Receiver filed, on a confidential basis, a comparison of the individual offers and the appraised values for each house. The major difficulty with this set of offers is that it would leave about half the houses unsold, thereby requiring a costly, continued receivership. No party suggested that serious consideration should be given to these offers.

[26] The Marlin en bloc Initial Offer was for a purchase price of $6.025. When, however, one took into account the broker’s commission and the carrying costs until a proposed March 31, 2013 closing, the Receiver estimated that the net proceeds under the Marlin offer would be $5.6 million, resulting in a shortfall to the secured creditors. The Marlin Initial Offer contained no commitment to use some or all of the Property for affordable housing. The broker’s covering letter accompanying the Marlin Initial Offer stated:

Mr. Geisler is interested in purchasing all 131 homes. He would, however, entertain taking any home with the existing tenants, as long as a higher rent can be negotiated. (emphasis added)

Although Bridlewood operates to provide affordable housing, it was of interest to note that Marlin included a condition in its offer that the Receiver “close and winterize all swimming pools in good workmanlike manner.”

[27] The HPNP en bloc offer was for the amounts owing to (i) the Credit Union, (ii) the Receiver’s Charge, (iii) the expenses the Receiver would incur, such as property taxes, and (iv) the Receiver’s fees. The secured creditors would not suffer a shortfall, but no surplus would exist for distribution to other non-profit co-operatives. HPNP intended to use the Property for affordable housing, and its offer contained commitments to that effect. Closing would occur on November 15, 2012. HPNP’s offer contained three basic conditions:

(i) The Receiver would obtain court approval for an increase in housing/occupancy fees to $875 per month effective November 1, 2012 and authorization to enter into new tenancy agreements for any vacant house at a monthly rent of $875;

(ii) Upon the filing of the Receiver’s Certificate all existing occupancy agreements would terminate and all existing residents would become tenants at a monthly rent of $875;

(iii) The Receiver would co-operate with HPNP, at its request and cost, to approach government authorities to obtain rent supplement payments for the units.

HPNP seeks approval of an increase in the occupancy charges prior to closing because, at law, upon the sale of a unit the occupant would become a tenant for purposes of the Tenant Protection Act with initial rent set at the amount of the occupancy charge payable to the co-operative immediately prior to the sale.

[28] The Receiver recommended that the Court authorize it to accept the HPNP offer because:

(i) The en bloc nature of the offer would avoid the need for the Receiver to repair and maintain the unsold homes (for which it has no funds) and the costs of a continued receivership;

(ii) The consideration would ensure that all secured charges were paid in full, whereas under the Marlin Initial Offer a shortfall would occur;

(iii) Although HPNP sought a pre-closing increase in the occupancy charges, it did so to ensure that post-closing rent levels were sufficient to fund approximately $2 million in borrowing which would be required to perform essential repairs to the houses;

(iv) A sale to HPNP would preserve a stock of affordable housing in the Town of Essex; and,

(v) Existing residents could continue to occupy the houses as tenants of HPNP at below market rents.

B.2 The October 11 Marlin Revised Offer

[29] Amendments to the Marlin Initial Offer were contained in the October 11, 2012 letter of its counsel, Robert Thomas. His letter makes it clear that the Revised Offer was prompted by an overture from Bridlewood’s counsel following the disclosure of the bid terms by the Receiver in its Second Report:

I have been advised by Erik Savas who acts as counsel for Bridlewood that MNP has brought a motion before Court in Toronto returnable on October 16, 2012 seeking among other relief Court approval of another en bloc offer tendered by HPNP…

I have been provided with materials filed with the Court in support of the MNP motion. Part of the motion materials includes a Second Report…of the Receiver…

Notwithstanding what appears to be a flawed analysis of MCMH’s en bloc bid, my client does not wish to engage in an unproductive debate with the Receiver over its Report…

In order to provide the Court and the Receiver with the ability to conduct a transparent “apples to apples” comparison of these two bids, my client has authorized the writer to amend its August 30, 2012 tender offer to the Receiver in the following manner…

In brief, the amendments resulted in Marlin matching the net consideration offered by HPNP and offering to all existing residents a one year lease at the existing monthly occupancy charge.

[30] From the evidence filed, I infer that Bridlewood and/or some of the residents requested an adjournment of the September 28 initial return date of the sale approval motion in an attempt to persuade Marlin to improve its offer. Since neither Bridlewood nor the member residents filed any responding evidence, quite frankly that is the only reasonable inference available on the evidence.

[31] So, Marlin’s Revised Offer would pay out all secured charges and guarantee existing residents (about 100) a one-year tenancy at their current occupancy charges. What would happen to the rest of the housing stock? That would lie completely within the discretion of Marlin once it obtained ownership of the Property. Marlin offered no assurance to continue to use the housing stock for affordable housing. What would happen to the existing residents upon the expiration of their one-year leases? The evidence suggests any one of three possible results: (i) a resident would purchase his or her house at a price negotiated with Marlin; (ii) the resident would continue as a tenant, if Marlin so permitted; or, (iii) the resident would vacate his or her house.

C. The permissible role of a post-deadline offer in any Soundair analysis

[32] The approach this Court takes to the consideration of post-bid deadline offers was reviewed by Morawetz J. in Re Terrace Bay Pulp Inc.[^8] Although in that case the offers arose in the context of a sale in a Companies’ Creditors Arrangements Act proceeding, the principles apply equally to a receiver’s sale. In Terrace Bay Pulp the applicant corporation, with the concurrence of the Monitor, sought approval of an asset sale at an effective price of $27 million. After the expiry of the bid deadline, the company received an offer from another party for an effective price of $35 million.

[33] In approving the recommended pre-deadline transaction, Morawetz J. re-iterated three basic points found in the jurisprudence. First, when determining the providence of a receiver’s sale conduct, the court should examine the receiver’s acts in light of the information it possessed when it agreed to accept an offer.

[34] Second, under Soundair, prices in post-deadline offers are relevant only to the extent they show that the price contained in the recommended offer “was so unreasonably low as to demonstrate that the receiver was improvident in accepting it”.[^9]

[35] Third, if they do not tend to show that the receiver was improvident, then the post-deadline offers “should not be considered upon a motion to confirm a sale recommended by a court-appointed receiver”.[^10] As Galligan J.A. stated in Soundair:

If they were, the process would be changed from a sale by a receiver, subject to court approval, into an auction conducted by the court at the time approval is sought. In my opinion, the latter course is unfair to the person who has entered bona fide into an agreement with the receiver, can only lead to chaos, and must be discouraged.

If, however, the subsequent offer is so substantially higher than the sale recommended by the receiver, then it may be that the receiver has not conducted the sale properly. In such circumstances, the court would be justified itself in entering into the sale process by considering competitive bids. However, I think that that process should be entered into only if the court is satisfied that the receiver has not properly conducted the sale which it has recommended to the court.[^11]

[36] Notwithstanding the $8 million difference in effective prices between the two bids in Terrace Bay Pulp, Morawetz J. concluded:

In my view, based on the information available at the time the Purchaser’s offer was accepted, including the risks associated with a Tangshan non-binding offer at that point in time, the consideration in the Transaction is not so unreasonably low so as to warrant the court entering into the Sales Process by considering competitive bids.

I have considered the situation facing the Monitor at the time that it accepted the offer of the Purchaser and I have also taken into account the terms of the Late Offer. Although it is higher than the Purchaser’s offer, the increase is not such that I would consider the accepted Transaction to be improvident in the circumstances.[^12]

[37] Returning to the present case, does the Marlin Revised Offer indicate that the HPNP offer was so unreasonably low as to demonstrate that the Receiver failed to conduct a proper sales process? In terms of the net proceeds realizable on the sale, obviously not – the consideration proposed in the Marlin Revised Offer simply matched that contained in the Deadline-compliant HPNP offer. Marlin now offers nothing more, but nothing less, when viewed from the perspective of the secured charges. Similarly, Marlin’s offers, just as the one by HPNP, would not result in any surplus assets for distribution on the ultimate dissolution of Bridlewood.

[38] That does not end the analysis. I read the Court of Appeal decision in Thornhill Green Co-operative as requiring a consideration of the special factors pertaining to non-profit co-operative housing in all element of the Soundair analysis, which would include whether a post-deadline offer disclosed improvident conduct on the part of the Receiver in the sale process. In my view, the Marlin Revised Offer does not.

[39] First, although neither the HPNP Offer nor the Marlin Revised Offer contemplate the continued viability of the co-op project precisely in its present form, the HPNP Offer comes close by proposing a new corporate vehicle to use all 131 units as affordable housing. The Marlin Revised Offer makes no such commitment. Second, it follows that of the two bids, it is only the HPNP Offer which aims to preserve the availability of a large block of affordable housing in the Town of Essex. A June 13, 2011 letter from the Windsor Essex Community Housing Corporation to CHF expressed strong concern “about any potential reduction in the current already inadequate supply of affordable housing”.

[40] Bridlewood submitted that given the withdrawal of a large number of members from project houses over the past few months, one could expect an exodus of remaining members should the Court approve an increase in the occupancy fee. It is not possible to predict the future. What the evidence shows is that HPNP would preserve a stock of affordable housing, work with the Receiver to secure rent supplements for the new project, and that 2,019 households are on the waiting list for social housing in the Windsor area, which includes the Town of Essex. An unsatisfied demand for social housing obviously exists in the area. Under the HPNP offer, 131 units definitely will remain available for social housing; under the Marlin Revised Offer, it is uncertain whether any will.

[41] Bridlewood also argued in its Factum[^13] that the houses are no longer capable of providing affordable housing for the long-term due to the magnitude of the required repairs. Consequently, according to Bridlewood, the Court should prefer the Marlin Revised Offer which would maintain low rents. I reject this submission. The members’ poor governance practices resulted in them neglecting the housing stock. It is audacious for them now to suggest that they should be rewarded for their mismanagement which, the evidence disclosed, contained a strong element of deliberate misconduct, including the breach of statutory requirements.

[42] Where the two bids differ is in their immediate treatment of the 100 or so existing members of Bridlewood. The Marlin Revised Offer provides them with a further year of occupancy at their current “rent”, with no certainty, one way or the other, beyond that one year. The Receiver submitted that I should infer from the genesis and timing of the Marlin Revised Offer and from the past efforts of existing members to purchase their houses in breach of statutory proscriptions against self-dealing by co-operative members that they most likely will end up buying their houses from Marlin for a price below the appraised values. That might happen - that the Revised Offer was prompted by a call from Bridlewood’s counsel raises certain suspicions in that direction. Then, again, it might not happen. The existing residents might find that after one year Marlin refuses to renew their leases and flips the land for other purposes. In short, the evidence is unclear how much security of tenure existing residents might enjoy under the Marlin Revised Offer. There might be some short term gain for them in the way of unchanged rents, followed, possibly, by real long-term pain if Marlin decided to use the land for other purposes.

[43] By contrast, the HPNP Offer would allow existing residents to continue occupying their houses, but as tenants. True, their rent would go up. But, it would go up in order to fund the extensive repairs which the evidence reveals simply must be done. The reason Bridlewood finds itself in receivership is that its Board and members were not prepared in past years to bite the bullet and set occupancy fees at the realistic levels needed to operate Bridlewood and to make the basic capital improvements required by an aging stock of houses.[^14]

[44] While I am fully alive to the financial pressures which a rent increase would impose upon individual members – Ms. Brown and Mr. Gill eloquently described them – one must look at the interests of the co-operative as a whole, that is to say from the perspective of making available a large stock of affordable housing. The evidence showed that the proposed occupancy fee of $875 a month would be somewhat less than the fair market rent for equivalent accommodation in the area,[^15] but somewhat higher than the occupancy fees levied by other co-operatives in the surrounding area for three-bedroom units.[^16] One must recall, however, that these co-operative units are stand-alone houses, not apartments or townhouses and, as well, they are units desperately in need of extensive repairs. The evidence revealed that the amount of the proposed increase in the occupancy fees was tied directly to the forecasted costs of necessary repairs.

[45] In light of that evidence, the features of the Marlin Revised Offer do not reveal that the Receiver has acted improvidently in seeking approval of the HPNP Offer when viewed from the perspective of the special characteristics of non-profit co-operative housing. On the contrary, a comparison of the two bids on that issue shows that the HPNP Offer is superior.

[46] In sum, the terms of the Marlin Revised Offer do not show that the proposed transaction with HPNP is improvident in the circumstances.

D. The balance of the Soundair analysis

[47] Returning, then, to a consideration of the Receiver’s recommendation concerning the offers received by the August 31, 2012 Deadline, the HPNP Offer clearly was superior to the Marlin Initial Offer – it offered a full payout of secured charges against the Property and ensured the continued availability of a large block of affordable housing in the Town of Essex. In terms of the interests of the existing resident members, I have already described how the HPNP Offer reasonably takes their interests into account in light of the real need to spend about $2 million to make necessary repairs to the houses.

[48] I recognize that approving the HPNP Offer will present many existing resident members will the difficult prospect of deciding whether they can afford an increased occupancy fee of $875 per month. I can only repeat that the evidence shows that the proposed increase is not an arbitrary one, but tied directly to the pressing need to fund essential repairs. Further, the HPNP offer includes a condition, acceptable to the Receiver, that the two co-operate in approaching government authorities to obtain rent supplement payments. Finally, HPNP has undertaken, through CHF, to arrange a temporary Security of Tenure fund to assist 8 to 10 households for up to one year with rental allowances ranging from about $200 to $300 per month. In the distressed financial circumstances of the Bridlewood project, current members cannot reasonably expect anything more.

V. Summary

[49] In conclusion, having applied the Soundair and Thornhill Green principles, I am satisfied that the Receiver has conducted a fair and transparent sales and marketing process which has taken into account, in a reasonable fashion, the interests of all affected parties and, as well, has made a sufficient effort to get the best price for the Bridlewood Property. The Receiver has not acted improvidently.

[50] For those reasons, I grant the motion of the Receiver, approve the transaction with HPNP and authorize the Receiver to execute the Sale Agreement. I have signed the Approval and Vesting Order (which includes a provision sealing Confidential Appendix “1”), together with the Order approving the activities of the Receiver described in its Second Report, Supplement to the Second Report and Second Supplement to the Second Report.

(original signed by)__________

D. M. Brown J.

Date: October 19, 2012

[^1]: 2011 ONSC 3898 [^2]: CCA, s. 171.2(1). [^3]: (1991), 1991 CanLII 2727 (ON CA), 4 O.R. (3d) 1 (C.A.) [^4]: 2010 ONCA 393, paras. 23 and 24. [^5]: Schembri v. Way, 2011 ONCA 528, paras. 8 and 9. [^6]: Soundair, supra., para. 58, quoting with approval Crown Trust Co. v. Rosenberg (1986), 1986 CanLII 2760 (ON SC), 60 O.R. (2d) 87 (H.C.), 109. [^7]: Ibid. [^8]: 2012 ONSC 4247. [^9]: Soundair, supra., para. 30. [^10]: Ibid. [^11]: Ibid., paras. 30 and 31. [^12]: Terrace Bay Pulp, supra., paras. 52 and 64. [^13]: Bridlewood Factum, paras. 43 and 44. [^14]: See the evidence referred to in paras. 11 and 12 of the Applicant’s Factum and para. 8 of the Reasons of Newbould J. [^15]: Receiver’s Second Report, para. 35(c); Connelly Affidavit, May 24, 2011, para. 11, Applicant’s Supplementary Compendium, Tab 3; Applicant’s Supplementary Motion Record, Tab 2A: April, 2012 data showing average monthly rents of $947 for 3-bedroom apartments in the Windsor CMA . [^16]: Bridlewood Factum, para. 42, which in turn referenced evidence contained in the CHF June 17, 2011 Factum at para. 55.