COURT FILE NO.: CV-18-592103-00CL

DATE: 2019-09-13

SUPERIOR COURT OF JUSTICE – ONTARIO

APPLICATION UNDER SECTION 101 OF THE COURTS OF JUSTICE ACT, R.S.O. 1990 C. c.43, AS AMENDED AND SECTION 243 (1) OF THE BANKRUPTCY AND INVOLVENCY ACT, R.S.C. 1985, C. B-3, AS AMENDED

RE: COMFORT CAPITAL INC., THE BANK OF NOVA SCOTIA TRUST COMPANY, E. MANSON INVESTMENTS LTD., FENFAM HOLDINGS INC., 593651 ONTARIO LTD. 1031436 ONTARIO INC., ALRAE INVESTMENTS INC., BARRY SPIEGEL, SHARON NIGHTINGALE, DAVID SUGAR, PHYLLIS SUGAR, NATIONAL TIRE LTD., 1119778 ONTARIO LIMITED, 1415976 ONTARIO LIMITED, ALRAE INVESTMENTS INC., BAMBURGH HOLDINGS LTD., BEVERLEY GORDON, DIANE GRAFSTEIN, RICHARD GRUNEIR, B. & M. HANDELMAN INVESTMENTS LTD., RIDGEWAY OCCUPATIONAL CONSULTANTS INC., YERUSHA INVESTMENTS INC., MIHAL TYLMAN, A. ELIEZER KIRSHBLUM, 593651 ONTARIO LIMITED, THE BANK OF NOVA SCOTIA TRUST COMPANY IN TRUST FOR BAILEY LEVENSON, THE BANK OF NOVA SCOTIA TRUST COMPNAY IN TRUST FOR ROSEMONDE KELLY, ANNE HANDELMAN, YERUSHA INVERSTMENTS INC., CELMAR INVESTMENTS CORP., BEVERLEY GORDON, PHILGOR INVESTMENTS LTD., BRILLIANT INVESTCORP INC., MAXOREN INVESTMENTS, 227046 ONTARIO LIMITED, DAST PROPERTIES LIMITED, TOVA MARKOVZKI, JOSEPH SUKONIC and B. & M. HANDERLMAN LIMITED, Applicants

AND:

ANNIE YERTSIAN, TERRY WILSON, 2457674 ONTARIO INC., 2399029 ONTARIO INC. AND MOSS DEVELOPMENT INC., Respondents

BEFORE: Penny J.

COUNSEL: Eric Golden for the Receiver Doug Bourassa for the Stanbarr Claimants P. James Zibarras for Canada Investment Corporation

HEARD: August 23, 2019

ENDORSEMENT

Overview

[1] This hearing was fixed by the June 27, 2019 Order of Mr. Justice Hainey. The matter before the Court arises out of the Receiver’s Tenth Report, which provides to the Court and to the parties the results of a Court-ordered Claims Process in respect of two claims asserted during the receivership proceedings. Only one of those claims was dealt with at this hearing. The other is scheduled for hearing on another date later this fall.

[2] The claim before the Court in this hearing is the Stanbarr Claim. The claim is against Canada Investment Corporation (“CIC”).

[3] The Receiver held net proceeds of the sale of a property referred to as the Caldwell property. CIC had a mortgage on the Caldwell property. The net proceeds include the sum of $784,843 (which has since been paid to the Accountant for the Superior Court of Ontario) and $3,772 in cash still held by the Receiver. Thus, it seems, there is $788,615 potentially available for distribution (the Funds).

[4] Stanbarr and CIC participated in the Claims Process conducted by the Receiver. CIC asked written interrogatories of the Stanbarr deponent. The evidence and the written interrogatories and answers to those interrogatories show that both parties to this claim were aware that the interpretation and effect of Justice Matheson’s Reasons for Judgment in Stanbarr v. Metropolis, CV-14-10585-CL, (the Scollard Action), were the lynchpin of the claim. The Receiver concluded that the Funds should be paid to the Stanbarr Claimants. The Receiver, Stanbarr and CIC have agreed to the payment of $80,000 from the Funds to Stanbarr. This was in respect of a costs order made in favour of the Stanbarr Claimants by Matheson J. in the Scollard Action. Thus, in issue is the remaining $708,615. The Receiver has submitted its Tenth Report and recommendations on the Claims Process to the Court. The Stanbarr Claimants ask the Court to issue an order accepting the Receiver’s conclusions and that the Funds be paid to them. CIC asks that the Receiver’s recommendation not be accepted and that the Court order the Funds to remain with the Accountant for the Superior Court, to the credit of the Scollard Action in a proceeding which remains pending before the Court.

The Receivership

[5] This proceeding began as a real estate-based receivership involving six properties owned by the Debtors. The Applicants held first mortgages registered against the properties as security for five loans. Rosen Goldberg was appointed receiver and manager of the Debtors’ assets by order of Mr. Justice McEwen dated February 28, 2018. The loans were in default and had matured by the date of the Receiver’s appointment. The loans were originated by C & K Mortgage Services Inc., carrying on business as Rescom Capital. Most of Rescom’s dealings in respect of the loans were with Ara Missaghi. A number of subordinate encumbrances against the properties were controlled by or related to Missaghi or companies controlled by or related to him. One of these companies, CIC, held a mortgage on the Caldwell property, one of the six properties subject to the receivership.

[6] Also in February 2018, Missaghi was charged with fraud over $5,000, conspiracy to commit an indictable offence, accessory after the fact to an indictable offence and uttering forged documents, all in connection with a mortgage fraud investigation involving $17 million and a number of properties. One of the properties involved in the fraud investigation and the Missaghi charges, the High Point property, was also one of the properties subject to this receivership.

[7] Partly as a result of the public disclosure of the proceedings against Missaghi, there arose a surfeit of claims against Missaghi and his companies. Many of these claimants attended the receivership proceedings seeking to advance “Mareva-like” claims to any net funds owing to Missaghi entities, including CIC.

The Claims Process

[8] Mr. Justice Dunphy, by order of August 3, 2018, directed that these claims would be addressed in the context of a Claims Process in the receivership proceedings. The rules for this Claims Process were established by order of Madam Justice Chiappetta, dated January 25, 2019. Justice Chiappetta’s rules for the Claims Process provide, among other things, that any party making a claim to surplus proceeds would have to prove on a balance of probabilities that it had a direct claim against CIC. The rules require the Receiver to evaluate the claims and to make recommendations to the Court. The rules also specifically provide that a claimant “does not need to prove a tracing remedy” regarding any of the surplus funds.

[9] The Stanbarr Claimants lodged a claim in the Claims Process, claiming entitlement to the net proceeds of sale of the Caldwell property otherwise due and owing to CIC as mortgagee. The Stanbarr Claimants were represented by Mr. Bourrassa at Chaitons. In accordance with the rules established by the order of Chiappetta J., the Stanbarr Claimants delivered two affidavits from Harvey Margel, a lawyer, in support of their claims. Mr. Zibarras, at BTZ, represented CIC. He delivered the affidavit of Missaghi.

[10] Both sides in the Caldwell proceeds claim chose to rely on material which had been filed earlier in these proceedings. The Stanbarr Claimants relied on material originally prepared in June 2018 in support of a motion for a Mareva-like order. This was material prepared, of course, before the August 3, 2018 Claims Process order of Dunphy J. had been issued. Similarly, Missaghi chose to rely on his responding affidavit, prepared in November 2018, before the Chiappetta J. order setting out in detail the rules for the Claims Process, was issued. Neither party elected to file additional material.

[11] I make this point because, as reflected in the Receiver’s Third Report, by July 27, 2018 Chaitons and BTZ had reached an interim settlement agreement on behalf of their respective clients providing that the Funds which would otherwise to be paid by the Receiver to CIC would be paid to the Accountant of the Superior Court of Justice to the credit of the Scollard Action. This was done. There was, therefore, after July 27, 2018, no need for, and no question of, a Mareva-like order in respect of the Funds.

The Stanbarr Claim

[12] The Stanbarr Claim against CIC originates from the allegation made in the Scollard Action that CIC prepared an inflated mortgage payout statement in respect of a property known as 91-93 Scollard St. in Toronto. CIC purchased an assignment of the first mortgage over the Scollard property for $764,290.90 plus a little over $15,000 for legal fees. At the time of the assignment, the Stanbarr Claimants held a number of subsequently ranked mortgages over the Scollard property with a cumulative debt of over $3.8 million. Less than a year after purchasing the $764,290.90 mortgage assignment, CIC sold the Scollard property under power of sale proceedings for over $5.8 million. CIC claimed that the principal plus interest arrears under its first mortgage totalled in excess of $6 million.

[13] The Stanbarr Claimants commenced an application challenging the power of sale and the inflated mortgage payout statement claimed by CIC. A hybrid trial on certain identified issues in that application was heard by Justice Matheson in June 2015. In Reasons for Judgment released on August 21, 2015, Justice Matheson found that the pre-assignment expenditure amounts included in CIC’s first mortgage payout statement on the Scollard property were improperly claimed.

[14] CIC’s discharge statement for the Scollard mortgage was in the amount of $6,010,856.32 by June 2014. Although she did not specify the exact amount owing on the CIC mortgage, Matheson J. reviewed the calculations relied on by CIC in the discharge statement and found that “the expenditures that predate the assignment of the [CIC mortgage] total more than $1.1 million, and interest was accrued on those amounts, resulting in the bulk of the very substantial increase in the amount said to be owing under the then CIC mortgage” (para. 40).

[15] Matheson J. also concluded, on the issue of the pre-assignment expenditures, that:

(a) the evidentiary record before her did not “provide an adequate foundation to conclude that the pre-assignment amounts were properly included by CIC as amounts due” under the CIC mortgage (para. 41);

(b) the amount outstanding under the CIC mortgage on the date of the assignment to CIC (August 9, 2013) was $764,290.90 (para. 37); and

(c) the transfer of the CIC first mortgage was “for the full value” (para. 11), and “was not assigned at a discount” (para. 37).

[16] There were also significant post-assignment expenditures which were challenged by the subsequent encumbrancers. Matheson J. went on to observe in the Judgment that, “as agreed between the parties, the question of whether the post-assignment amounts should have been added to the amount due under the [CIC mortgage] is not being addressed now” [emphasis added].

[17] In its conduct of the Claims Process, the Receiver considered the findings of Matheson J. in her Reasons for Judgment. The Receiver conducted an analysis of the calculations in the CIC discharge statement that was before Matheson J. and identified the exact amount of the pre-assignment expenditures found by Matheson J. to be improper as $1,162,472.78.

[18] In its analysis of the Stanbarr Claim, the Receiver determined that there were two ways of interpreting Matheson J.’s findings. Even on the interpretation most favourable to CIC, however, the Receiver concluded that $920,449.12 was received by CIC on account of inflated pre-assignment expenditures. Since only $784,843 is available from the sale of the Caldwell property, the Receiver concluded that the full amount paid into Court from the sale of the Caldwell property should be paid to the Stanbarr Claimants.

The Issue for This Hearing

[19] The issue for this hearing is whether the Funds should be paid to the Stanbarr Claimants, as recommended by the Receiver, or remain with the Account to the credit of the Scollard Action until that proceeding is finally resolved in the context of other outstanding matters.

[20] The Stanbarr Claimants submit that Dunphy J.’s August 3, 2018 order implemented a process for the adjudication of the various claims to the Funds that were realized in this receivership. That order required the Receiver to report to the Court on the Claims Process. The ground rules established by Chiappetta J. for the Claims Process set out how the claims were to be advanced and specifically provided that the Receiver’s report “will evaluate the various claims and make recommendations to the Court.”

[21] The Receiver has, in accordance with the order of Chiappetta J., submitted to the Court its recommendations arising out of the Claims Process.

[22] The onus is on the party disputing the Receiver’s recommendation to show sufficient reason why Receiver’s recommendation in a claims process established by the Court should not be followed. In Coast Capital Savings Credit Union v. Symphony Development Corp. 2011 BCSC 333 (at para 20) the B.C. Supreme Court explained that the Court’s review of a receiver’s determinations must be conducted on a principled basis; the review must not trample on the integrity of the claims process. The review or appeal process should not detract from the requirement that parties who choose to engage in the claims process in the first instance must take it seriously. Further, the review process should be one that maintains the onus on any party who disputes the receiver’s decision. This approach was approved by Mr. Justice Newbould in DBDC Spadina Ltd. v. Walton 2015 ONSC 5608 (at para. 2).

[23] In any event, the Stanbarr Claimants submit that their claim is based on a factual finding of Matheson J. which has not been disturbed or otherwise contradicted or overturned on appeal. CIC, they submit, has led no substantive evidence disputing the conclusion that the pre-assignment amounts were wrongfully included in the CIC mortgage claim.

[24] CIC advances several procedural and one substantive argument in opposition to the position of the Stanbarr Claimants. CIC submits that:

(a) the Stanbarr Claim has been made in the wrong forum;

(b) there is no proceeding before the Court;

(c) there is been a lack of notice; and

(d) the reasons of Matheson J. do not represent a finding of fact sufficient to support the Stanbarr Claim because:

(i) Justice Matheson expressly did not make a finding on the amount to which CIC was entitled on its first mortgage on the Scollard property; and

(ii) the trial in that proceeding is not yet over and remains pending before the Superior Court of Justice.

Analysis

Wrong Forum

[25] CIC argues that the Funds in issue in this receivership are from realization on the Caldwell property. No funds in this proceeding can be traced to the sale of the Scollard property. The Scollard property, in fact, has nothing to do with this receivership. Accordingly, the Funds should remain with the Accountant for the Superior Court of Justice and the Stanbarr Claimants should make their claims in the continuation of the Scollard Action.

[26] I do not agree. In these proceedings, Dunphy J. was faced with numerous competing claims to proceeds of sale of the six properties involved in this receivership and with threatened Mareva-like motions. He ordered that, in the interests of expedition, efficiency and judicial economy, those claims be pursued in a claims process in this receivership. Chiappetta J. made specific orders establishing the procedures, including that the Receiver’s recommendations be submitted to the Court. No appeal was taken from those orders.

[27] The Stanbarr Claimants and CIC participated in the Claims Process. Leaving aside for the moment the final and only substantial question in issue (the effect of the Matheson J. Judgment), from a process point of view there is no requirement that the Stanbarr Claims be asserted only in the Scollard Action.

No Proceeding Before the Court/Lack of Notice

[28] CIC also argues that there is no proceeding before the Court. No one has, for example, brought a motion for the enforcement of Receiver’s recommendations.

[29] I am unable to place any weight on this argument. The order of Chiappetta J. required the Receiver to report to the Court on the outcome of the Claims Process. This hearing was scheduled for this very purpose by the order of Hainey J. The Receiver has simply done what it was required to do by Justice Chiappetta’s order. The parties received the Tenth Report, containing the Receiver’s recommendations, well in advance of the scheduled hearing. Both the Stanbarr Claimants and CIC filed a factum addressing the issues.

[30] There can have been no confusion about what the Stanbarr Claimants were seeking. Although the material they relied upon in the Claims Process was the same material they filed when contemplating a Mareva-like order, there can have been no confusion or misunderstanding during the Claims Process that the Stanbarr Claimants were seeking payment to them of the Caldwell proceeds. The requests for a Mareva-like order were no longer on the table. The parties had already agreed that the Funds would be secured by payment to the Accountant for the Superior Court of Justice.

[31] There is simply no basis for the suggestion that CIC was somehow caught by surprise or failed to understand what was at stake in the Claims Process or in this hearing to receive the Receiver’s Tenth Report dealing with the outcome of the Claims Process.

Decision of Matheson J.

[32] This brings us to the final, substantive issue for resolution arising out of the Receiver’s recommendation.

[33] This issue turns on the proper interpretation of Justice Matheson’s Reasons for Judgment dated August 21, 2015 in the Scollard Action. The specific issue in dispute is whether Matheson J. made a final and binding determination of whether, and in what amount, the pre-assignment expenses claimed by CIC were validly added to the amount of CIC’s first mortgage as of June 6, 2014, the date of sale under the power of sale.

[34] The interpretation of a Superior Court of Justice judgment is a question of law. Accordingly, while I accept that the onus is on CIC to show sufficient reason why the Receiver’s recommendation should not be followed, the “threshold of review,” if you will, is clearly one of correctness. In simple terms, if the Receiver is correct that the Judgment decided the question in favour of the Stanbarr Claimants, sufficient cause will not have been shown; if CIC is correct that the Judgment did not decide the question, sufficient cause will have been shown.

[35] At the heart of the proceeding before Matheson J. was the sale under power of sale of 91-93 Scollard Street on June 6, 2014. Four issues relating to the power of sale had been identified in prior procedural orders for determination at a hybrid trial in the Scollard Action.

[36] The four issue were:

(1) is the November 28, 2013 notice of sale valid?

(2) if not, is the purchaser, 2413913 Ontario Inc. a bona fide purchaser for value without notice of the invalidity of the sale? If so, can it obtain title to the property?

(3) if the answer to question #2 is no, are the mortgages registered subsequent to the purchase valid?

(4) if the answer to question #3 is no, do the mortgagees have an equitable subrogated interest if they advanced funds?

[37] At the outset of the trial, an issue was raised about the quantification of the first mortgage held by CIC on the Scollard property. Matheson J. stated in the Judgment that “After discussion, the parties agreed that the following issue could be determined at the hybrid trial” as part of the first question:

Is the amount of the [CIC] mortgage set out in the Notice of Sale dated November 28, 2013, overstated by the inclusion of those expenses set out in Exhibits A and B of the Supplemental Affidavit of George Safarion sworn August 10, 2014, excluding those expenses incurred after August 2013?

[38] In other words, the parties agreed at the outset of the trial that one of the issues for the trial would be whether the pre-assignment expenses claimed by CIC as part of its mortgage statement following the sale had been improperly claimed by virtue of having been “overstated.” And, as we will see in the following examination of the Judgment, Matheson J. heard evidence on and addressed this issue, as well as the other issues, during the trial and in her Judgment.

[39] Matheson J. made the following findings of fact in her Reasons for Judgment:

(e) the first mortgage was originally held by Equitable Trust securing the amount of $1.2 million (para. 11);

(f) the mortgage was transferred to a third party in 2009. The terms of the mortgage were amended at that time to reduce the principal from $1.2 million to $710,000 (para. 11);

(g) CIC took an assignment of this mortgage on August 9, 2013. At that time, the mortgage was transferred for full value in the amount of $779,720.86 (para. 11);

(h) the mortgage was not assigned at a discount (paras. 11 and 37);

(i) by November 2013, there were numerous subsequent encumbrances on the Scollard property in the aggregate amount of about $4.165 million (para. 9);

(j) CIC commenced notice of sale proceedings on November 28, 2013. The notice of sale stated that the amount due under the CIC mortgage totaled $3,271,947.36, including $2,988,966.14 for principal, interest and costs. Thus, according to CIC, the amount owing under its first mortgage had quadrupled in the five months since it took an assignment of the mortgage for $779,720.86 (paras. 16, 17 and 69);

(k) the property was sold in March 2014 to a bona fide purchaser for value for $5.875 million (paras. 18 and 20);

(l) when CIC completed the sale, it delivered to its counsel a discharge statement claiming that $6.01 million was outstanding on its mortgage, representing an 800% increase in the amount of its mortgage since the time of the assignment some eight months earlier (paras. 23 and 39);

(m) CIC attempted to justify these pre-assignment increases as “property management” and “maintenance” expenses stretching back to 2009, years before it had taken an assignment of the mortgage (para. 40);

(n) CIC failed to provide a sufficient evidentiary record to support the claimed increases. There was no satisfactory explanation for why, if they were proper expenditures under the mortgage, they were not included in the amount outstanding at the time of the assignment of the mortgage to CIC (para. 41);

(o) CIC’s claim for pre-assignment expenses was inconsistent with the contemporaneous documentation surrounding the assignment, which made no mention of any amounts being “left out” of the total amount outstanding (para. 42);

(p) vague reference to an “agreement” about additional amounts owing was unsupported by any documentary evidence or details (para. 43);

(q) the evidence of Mr. Missaghi was rejected as “weak evidence adduced through leading questions” by CIC’s own counsel (para. 44);

(r) the pre-assignment amounts “were not properly included in the amount due under the CIC mortgage;” (para. 95); and finally

(s) the evidence also raised questions about the validity and amount of CIC’s claimed post-assignment expenses. However, as agreed between the parties, the question of whether the post-assignment expenses should have been added to the amount owing was “not being addressed now.” For this trial, the only issue was the propriety of including the pre-assignment amounts in the sum set out in the notice of sale (paras. 45 and 46).

[40] With respect to the other issues concerning the notice of sale, Matheson J. concluded that:

(1) the notice of sale was not valid;

(2) the purchaser, although bona fide and for value, had notice of the defect; and

(3) the subsequent encumbrancers also had notice of the defect.

[41] The fourth issue, having to do with equitable subrogated interests, was interconnected with the issue of the total amount owing on the CIC mortgage, and was therefore left to be decided, in conjunction with other issues such as the validity of the claimed post-assignment expenses included in the mortgage amount claimed, at the second phase of the trial.

[42] Appeals were taken from Matheson J.’s Judgment regarding the invalidity of the notice of sale and the invalidity of the pre-assignment expenses. The appeal on the latter issue was abandoned. The appeal on the former issue was allowed. The Court of Appeal held that the notice of sale was properly issued and was therefore valid. Justice Matheson’s conclusion, that the pre-assignment expenses were invalid, was neither challenged nor overturned on appeal.

CIC’s Argument

[43] CIC argues that the “pre-assignment expense” issue was an afterthought, added to the list of issues for trial at the last minute; indeed, it was only added at the very outset of the trial. CIC appears to argue from this starting premise that the issue of the pre-assignment expenses was not fully addressed by the evidence or in argument at the trial. CIC further argues that because the issue was last minute and not adequately addressed, it is an issue in respect of which further evidence could be adduced at the second phase of the trial, which is still pending. In this context, Mr. Zibarras relies on para. 126 of the Judgment, in which Matheson J. observed that there was “considerable disagreement between the parties about the extent to which all or part of a remedial order was to be determined at the trial.” The paragraph concludes with the statement that “Certainly, the quantification issues were mainly left to the second stage.”

[44] Counsel for CIC also relies, to similar effect, on a sentence from the November 30, 2015 Endorsement of Matheson J. in which she dealt with certain matters arising out of the Reasons for Judgment. Under the heading “Next Steps” Justice Matheson wrote: “The applicants submit that there is only one issue remaining, specifically the amount due and owing under the CIC mortgage as of the date of sale and the parties should move with expedition to have that issue determined.”

[45] On the basis of these statements, CIC argues that the quantification and the remedial consequences of the findings made in the first phase of the trial have not yet been resolved. For this reason, CIC argues, the trial is not over on these issues, such that the Funds should be left with the Accountant pending the final resolution of phase two of the trial.[^1]

Analysis

[46] I am unable to agree with CIC’s submission. There could have been no doubt that the issue of the validity of the pre-assignment expenses was an issue for the trial which took place before Matheson J. This was expressly agreed between the parties. CIC adduced evidence specifically addressing this issue. The matter was fully argued. Matheson J. gave extensive reasons on this issue.

[47] Although Matheson J. said in her Reasons that the expenditures that predated the assignment of the mortgage to CIC “total more than $1.1 million,” the evidence of the pre-assignment expenses was clearly before the Court. Justice Matheson, in using the expression “more than,” was not expressing any doubt about the amount, or need for a further trial to determine the amount of the improper pre-assignment expenses.

[48] Based on the documentary evidence from the trial, the Receiver had no difficulty calculating the precise amount of $1,162,472.78. CIC did not argue, in the Claims Process, that this number was wrong or put forward any basis upon which it ought to be rejected.

[49] Matheson J. made it clear in para. 46 of her Reasons that it was the “post-assignment” expenses that were not being addressed in the first phase of the trial. The “only issue” of expenses for the trial was “the propriety of including the pre-assignment amounts in the sum set out in” the notice of sale.

[50] It is in this context that the passage in para. 126 of the Reasons (and in para. 17 of her later Endorsement), relied on by CIC, must be understood. When Justice Matheson refers to the “quantification issues” being “mainly left” to the second phase, it is clear she is referring to the propriety of the post-assignment amounts. The use of the qualifier “mainly” is an express acknowledgment that the propriety and quantification of the pre-assignment expenses had already been addressed in phase one of the trial and dealt with in her Reasons for Judgment.

[51] I therefore conclude that the pre-assignment expenses were dealt with at the trial before Matheson J. and finally resolved in her Reasons for Judgment. She held that these expenses were improperly added to CIC’s mortgage claim. There was no appeal from this finding. The issue of the propriety of $1,162,472.78 in claimed pre-assignment expenses is therefore res judicata. Being a final judgment of this Court, the Receiver was correct in relying on the decision of Matheson J. to conclude that the Stanbarr Claim should be allowed and the Funds paid to the Stanbarr Claimants. I therefore accept the Receiver’s recommendation and order that the Funds be paid by the Accountant (and any residual Funds in the hands of the Receiver be paid by the Receiver) to the Stanbarr Claimants.

Conclusion

[52] The Receiver was correct in its conclusion and recommendation that the decision of Matheson J. is dispositive of the Stanbarr Claim. I accept the recommendation of the Receiver and order that the Funds be paid to the Stanbarr Claimants.

Costs

[53] The parties advised me following the hearing that they had come to an agreement that costs in the amount of $15,000 ought to awarded to the successful party. Accordingly, I award costs payable by CIC to the Stanbarr Claimants in the amount of $15,000.

Penny J.

Date: September 13, 2019

[^1]: Mr. Bourassa submitted on behalf of the Stanbarr Claimants that, in the absence of CIC’s argument on the point now before the Court in this proceeding, it is extremely unlikely that there will ever be a phase two of this trial for the simple reason that the money is gone and it is unlikely, given the collapse of the CIC business in the storm of fraud allegations against Mr. Missaghi, that CIC would be good for any judgment awarded against it.