Court File and Parties

COURT FILE NO.: CV-16-23564 DATE: 20160621 SUPERIOR COURT OF JUSTICE - ONTARIO

RE: TAMMY LYNN CIKALO, Applicant (Responding Party on the Motion) AND: 1889072 ONTARIO LIMITED, MICHAEL CHRSITOPHER ROHRER and MARTIN CHARLES BERNHOLTZ, Respondents (Moving Party on the Motion)

BEFORE: CAREY J.

COUNSEL: Steven Pickard, Counsel, for the Responding Party Applicant Benjamin Salsberg, Counsel, for the Moving Party Respondents

HEARD: July 20, 2016

Endorsement

[1] On May 23, 2016, Campbell J. made an order on consent limiting the respondent, 1889072 Ontario Limited ("188") in the dispersal of assets. It was intended to be addressed on June 23, 2016 or, at the latest, July 4, 2016. A tight timetable was set out for filing of material for the argument of interim relief.

[2] For various reasons, the earliest date for the argument on the application was July 20, 2016.

[3] The parties disagree as to whether the order constitutes a mere condition of an adjournment or an interlocutory injunction. In any event, the respondents seek a variation of the order by removing any restraint upon the respondents from dealing with 188's assets pending final determination of this proceeding.

[4] Subsequent to the May 25, 2016 order, the respondents advise they obtained clarification from this court in Toronto (Newbold J.) of the respondent 188's priority as a secured creditor over the unsecured creditors of Selectcore.

[5] The respondents say the applicant has failed to demonstrate a strong prima facie case on the merits nor a risk to 188's assets that would justify the extension of an interlocutory injunction restraining them further. None of the other tests for an interlocutory injunction have been met they assert, including evidence of irreparable harm and an undertaking as to damages.

[6] The applicant says the order should continue as, without it, the applicant will have no security for their investment and other unsecured creditors will receive the benefit of payments to 188 due from Selectcore's provision of services to the City of Toronto. The applicant says she will lose "her life savings."

[7] I am of the view that the order of May 25, 2016 is in the nature of an interlocutory injunction. The applicant has not persuaded me that its continuation is justified or required. The pre-requisites set out in RJR-MacDonald Inc. v. Canada (Attorney General), 1994 CarswellQue 120, [1994] 1 S.C.R. 311, have not been satisfied. I do not agree with the applicant that the respondents lack the authority to deal with Selectcore as they have and propose to do. I am satisfied that the respondents are acting in the legitimate interests of the lenders and they are not, as alleged by the applicant, running a "Ponzi Scheme."

[8] I am further satisfied that it is more likely that the course of action the applicant seeks in her action will result in the loss of the lenders' investment.

[9] The applicant's interpretation of the various documents does not accord with their plain meaning. There is no evidence that the respondents have put the interests of Selectcore ahead of the investors or are participating in an illegal collusion. There has been no undertaking regarding damages filed by the applicant.

[10] Accordingly, an order will issue in accordance with para. (a) and (b) of the respondents' motion.

[11] If the parties cannot agree on costs, written submissions limited to three (3) double spaced pages (plus a Bill of Costs for the respondents) will be received no later than August 30, 2016.

"original signed and released by Carey J." Thomas J. Carey Justice Date: July 21, 2016