Court File and Parties

COURT FILE NO.: 26862/15 DATE: 2017-03-03 SUPERIOR COURT OF JUSTICE - ONTARIO

RE: Maria Struik, Plaintiff - and - Dixie Lee Food Systems Ltd., Dixie Lee of Canada Inc., Dixie Lee Capital Corporation, Joseph Murano, Noele Murano and Dixie Lee Ontario Ltd., Defendants

BEFORE: Justice A.S. Rasaiah

COUNSEL: Robert J. Reynolds, for the Plaintiff J. Poitras, Agent for Jillian Burford-Grinnell, for Dixie Lee Ontario Ltd. and Noele Murano J. Murano, for Self and Dixie Lee Foods System Ltd., Dixie Lee of Canada Inc. and Dixie Lee Capital Corporation

HEARD: March 2, 2017

Endorsement

[1] The motion continued before me today for this matter following my reasons released January 23, 2017. My said reasons contain the materials I have reviewed in this case, the facts and my findings regarding this case to date, which I will not repeat but hereby confirm I have considered for this decision.

[2] Today, the plaintiff seeks enforcement relief and submitted a draft order for my consideration.

[3] Paragraph 1 of the draft order, if ordered would prohibit the transfer and encumbrance of DLOL assets. The balance of the paragraphs of the draft order appoints the plaintiff as receiver and sets out the terms of the receivership.

[4] DLOL and Noele Murano do not object to paragraph 1 of the draft order. They object to the remaining provisions, the provisions appointing the plaintiff as receiver and the provisions pertaining to the receivership. They submit paragraph 1, namely a prohibition on the transfer of any assets of DLOL is sufficient and that the plaintiff should be required to then proceed to the ordinary remedies of execution available, such as an examination in aid of execution, as anyone else ought to. They also argue that interested parties, such as lawyers, accountants, and Mr. Keeley, ought to have been served and/or may be prejudiced by the appointment. They also question the appointment of the plaintiff based on allegations made by Food Systems and Capital, carried on by DLOL regarding the plaintiff’s and/or the plaintiff and her deceased husband’s operation of Dixie Lee Chicken franchises (as set out in the materials filed).

[5] I am satisfied that I have authority, and that this is a proper case to exercise my discretion to order what is sought by the plaintiff in the form of the draft proposed order filed, pursuant to section 101 of the Courts of Justice Act, R.S.O. 1990, c. C.43 as am., and rule 60.02 of the Rules of Civil Procedure, R.R.O. 1990, Reg. 194 as am.

[6] I find it is just and convenient to do so in this case. I appreciate receivership is not a remedy that should be granted as a matter of course as expressed by Mr. Poitras.

[7] My reasons are as follows.

[8] The property in question that the plaintiff knows of is as follows:

(1) Dixie Lee franchises and franchisor rights and powers (collectively referred to as “franchisor rights and powers”), in particular: the franchises left operating in Ontario; the power to market and operate Dixie Lee franchises in Ontario, elsewhere in Canada and the world; and the actual and potential income streams connected with those rights and powers; and

(2) A 50% shareholding in 1462103 Ontario Inc.

[9] I agree that the first asset presents with some complexity. It includes franchise agreements and/or potentially other various documents to gather and consider. The extent of this asset needs to be identified, which was not always clear from Joseph Murano’s evidence. In addition, there may be financial documents to gather and consider in evaluating these assets for realization. There may be banks and/or other financial institutions to deal with.

[10] I also agree that the second asset, namely the shares, introduces a level of complexity. The shares may need to be tracked down and put in order, given the history of the transfers/documents prepared regarding these shares. Further, dealing with this asset will involve addressing a shareholder agreement, and discussions and negotiations with Mr. Keely; and potentially coming back to the court with a proposal or request for further directions on how the plaintiff may realize on this shareholding.

[11] The cases submitted support that a judgment creditor such as this plaintiff may be appointed as a receiver and I find it is sensible to do so in this case. The plaintiff has many years of experience with Dixie Lee Chicken and is well equipped to understand the operation and the assets. DLOL and/or Noele Murano have not filed any evidence of any other property it currently holds that the plaintiff would not be familiar with and/or would be able to appreciate in the role as receiver.

[12] It is also unknown what will be realized at this date on these assets and the hiring of a private receiver would undoubtedly involve additional expense to the plaintiff, who has already to date incurred costs of four court actions/applications, and prior enforcement steps involving one or more of the defendants in this case.

[13] DLOL and/or Noel Murano filed no evidence to establish that the appointment of the plaintiff as receiver would have serious and potentially permanent adverse effect on DLOL or interested parties. I am not satisfied that DLOL’s reliance on unproven allegations made by Food Systems and Capital against the plaintiff in respect of her, and/or her and her deceased husband’s, past operation of Dixie Lee Franchises establish same to disqualify her as an appropriate receiver or that she is before this court with “unclean hands”. DLOL and/or Noel Murano filed no up-to-date evidence to establish that the plaintiff will or is likely to compromise DLOL or act to its detriment.

[14] Further, the proposed order, by its definition of property, extends solely to the property of DLOL. The property in which there are interested parties, such as Mr. Keeley will still be subject to the agreements that pertain to same, such as, in the case of Mr. Keeley, the shareholder agreement. This situation the plaintiff acknowledges, and she further acknowledges that addressing the shares may require further direction of the court. Finally, the proposed draft order includes a provision that permits an interested party to apply to vary the order.

[15] I also find that there is a related enforcement history in this case that additionally balances the case in favour of the appointment, as just and convenient. Joseph Murano was examined in aid of execution on the plaintiff’s first judgment, as officer and underwent a cross-examination in these proceedings. He gave a number of undertakings that were left unanswered despite requests and despite affidavits filed before this court, outlining this fact. He is the officer of DLOL. The evidence further establishes the great difficulty the plaintiff had in getting Noele Murano to attend a cross-examination in this proceeding.

[16] There is also a history of Joseph Murano providing wrong information to the plaintiff as to who owned what and on what basis over the course of litigation and attempts to enforce judgments, as set out in my January 23, 2017 reasons.

[17] Further, there is a history of transfers and failures by the related corporations to meet security obligations that seriously affected/jeopardized the plaintiff’s right to recovery, including but not limited to the transfer of shares owned by Food Systems to Capital to DLOL resulting in court actions. There was no evidence from DLOL, Noele Murano and/or their officer Joseph Murano, filed to establish or even express an intention that the future would be different from the historical decided transactions.

[18] I reviewed the draft order and am satisfied that the terms are satisfactory, and appropriate. I note that the draft order for the most part follows the standard form template receivership order (“model order”) of the Toronto commercial list office.

[19] Accordingly, based on the above, I am granting an order prohibiting the transfer and encumbrance of the assets of DLOL; and further appointing the plaintiff as receiver in the form of the draft proposed order, as signed by me on today’s date, a copy of which the parties may obtain from the Court Filing Office once entered.

[20] Finally, as discussed following the argument of the remaining part of this motion, the parties will make brief written submissions to me as to costs.

Justice A.S. Rasaiah Date: March 6, 2017