Court File and Parties

Court File No.: CV-15-10956-00CL & CV-14-10727-00CL Date: 2021-06-24 Superior Court of Justice – Ontario (Commercial List)

Re: John Edward Anthony Lash, Applicant And: Lash Point Association Corp., Respondent

And Re: Timothy John Francis Lash, Applicant And: Lash Point Association Corp., Lash Avalon Holdings Limited, Penelope Lash Lorimer, Elizabeth Gaye Harden, Donalda Secor, Timothy Charles Stevenson Lorimer, John Roger Miller Lash, Wendy Tanis Lash, Jennifer Lash, Catherine Penelope Lash, Anthony Baldwin Lash, Peter Charles Baldwin Lash, John Edward Antony Lash, David Marshall Casey Lash, Nancy Tanis Lash Robinson, Tanis Elizabeth Robinson, Seanna Mackenzie Robinson and Airlie Lash Robinson, Respondents

Before: S.F. Dunphy J.

Counsel: Kenneth Kraft and Sara-Ann Wilson, for the Receiver E. Patrick Shea and Christopher Stanek, for Lash Point Association Corp. and the Applicants/Respondents Peter Charles Baldwin Lash, John Edward Anthony Lash Justin W. de Vries and Jacob Kaufman, for the Respondents Elizabeth Gaye Harden, Donalda Secor, Wendy Tanis Lash, Jennifer Lash, Catherine Penelope Lash, Tanis Elizabeth Robinson, Seanna Mackenzie Robinson and Airlie Lash Robinson Tim Lash, appearing in person

Heard at Toronto: June 10, 2021

Reasons For Decision

[1] This is a motion for directions by the Grant Thornton Limited, the court-appointed receiver of the assets and property of Lash Point Association Corp. pursuant to the Canada Not-for-Profit Corporations Act, SC 2009, c. 23. The Receiver seeks directions on dealing with an offer for the purchase en bloc of a large Muskoka property the Receiver is charged with dividing into parcels and selling separately.

[2] The order appointing the Receiver directed the Receiver to carry out the “Buy-Out Terms” attached to it. In general terms, those terms directed the receiver to conduct a process to permit the 25 then-members of LPAC to decide if they wished to remain members or to depart. The departing members were required to surrender their membership and the Receiver was directed to cause the land to be severed into a remaining parcel for those electing to remain members of the corporation and an indeterminate number of other parcels with the object of selling the other parcels as needed to raise the funds necessary to pay the departing members their share of the fair market value of LPAC’s land.

[3] After more than four years and approximately $1.6 million in expenses, it would appear that matters have not progressed very far beyond the half-way point. The time and funds necessary to complete the task can only be estimated at this point, but the Receiver may need “at least” two more years and more than $1 million in additional funding. Material contingencies remain to be overcome. With a high-cost mortgage that has been funding the Receivership coming due in September and the mortgagee declining to renew, the Receiver asks for directions as to how it ought to respond to an offer to purchase the entire property that eleven of the thirteen founding member have indicated their firm support of.

[4] The Receiver takes no position on the merits of the motion but the parties affected by the potential sale are sharply divided on the matter. Of the eight remaining LPAC members, two have effectively changed camps and support the sale transaction, two are firmly opposed to it and wish the Receiver to carry on as before while the rest have expressed no opinion – at least none that they wished to convey to the Court. Including the two “remainers” who have changed sides, 87% of what might be called the economic interest in LPAC’s lands supports the transaction and wishes to see the Receiver directed to accept the offer and complete the sale.

[5] For the reasons that follow, I am directing the Receiver to accept the offer. Given the evolution of circumstances since the Buy-Out Order was first made, I am satisfied that it is no longer reasonable to ask the Departing Founding Members to wait longer to be paid the fair value of the units they were required to surrender at the outset of the process. While the proposed sale agreement is not the product of a rigorous, court-supervised process, I am satisfied by the evidence that it nevertheless represents a competitive fair-market value proposal that offers the Receiver significant risk-mitigation advantages and has the overwhelming support of those who are beneficially entitled to the proceeds of a sale of the property. I am therefore ordering the Receiver to accept and proceed to close the proposed sale agreement. As and when the sale agreement has been closed, there will be a proper opportunity to make such further orders regarding the proceeds as are required.

Factual background

[6] How the Receiver came to be appointed, its mandate and the nature of the disagreements laid before me is a long and complex story.

[7] The object of the dispute is the Lash Point Property - an approximately 30-acre tract of land on Lake Rousseau in the Muskoka area. The land in question was acquired more than 100 years ago by the great-grandfather of the Lash family clan.

[8] By 1992, the Lash Point Property had passed into the hands of the founder’s six great grandchildren. One of them sold her interest to the remaining five. Four of the remaining five transferred their undivided interests to their own children (twelve in number). The fifth (Mr. Tim Lash) held on to his full one-fifth ownership interest. Each of the thirteen at the end of this process had an undivided co-ownership interest in the Lash Point Property (1/15 for each of the next generation, one-fifth for Mr. Tim Lash).

[9] In 1996, the thirteen co-owners decided to transfer the Lash Point Property to LPAC incorporated by them for this purpose. There is some dispute about who intended what in relation to this transfer – the relevance if any of that dispute was dealt with in the decision of Penny J. to which I shall refer and is not otherwise an issue before me. The co-owners who transferred their interest retained a limited reversion interest in the land they transferred to the corporation: in the event of a dissolution or winding-up of LPAC, they were each entitled to a share of the proceeds of the land in proportion to the undivided interest each contributed. This group of thirteen are referred to as the “Founding Members” or the “Founders” by the parties in their various affidavits and written arguments.

[10] The by-laws of the corporation allowed the addition of new members from among the adult children of the Founders. New members would have use of the land and contribute to the annual costs of owning and maintaining it but had no interest in the property on dissolution or winding-up. Over the next twenty years membership of the corporation evolved. Twelve non-founding members were added to the thirteen Founders. The rights of new members differed from the Founders on wind-up or dissolution but otherwise they were voting members and a two-thirds majority was required to cause the corporation to be wound-up.

[11] Over time, significant disputes arose among the various members of the extended family who had become members of LPAC. These disputes led to litigation in 2014. Relations among the members were described by Penny J. as dysfunctional. They were dysfunctional enough that they could not even coalesce around a single dispute to be divided about. Two competing applications emerged and the combatants chose their sides.

[12] The first of these was a 2014 application commenced by Mr. Tim Lash. This application sought a winding-up of the corporation. The competing 2015 application was commenced by his nephew and fellow Founder Mr. John Lash who proposed instead that the corporation undergo an arrangement that would result in the Founders who wished to leave doing so with some compensation for their residual interest. By the time of the hearing of the two applications before Penny J. in September 2016, the “arrangement” solution had morphed into a somewhat simpler buy-out plan.

[13] While a two-thirds majority could not be mustered for any solution to the problems besetting the corporation and its governance, Penny J. noted that the one goal shared by all litigants was that a solution was needed that would permit the “leave” camp to do so on fair terms even if there was no common conception of what “fair” meant. Beyond that high-level goal, consensus quickly dissolved into dispute.

[14] Penny J. fashioned a solution that broadly adopted the buy-out approach of the 2015 application of Mr. John Lash while addressing many of the criticisms of that proposal made by Mr. Tim Lash and members in his camp. In other words, it was a compromise with neither side getting all it wanted.

[15] The objectives behind the decision of Penny J. were stated clearly enough – to allow the departing members to do so and receive the fair market value of their contributions to the corporation “as if” there had been a wind-up while allowing the corporation to continue with such members – including Founders – who desired to do so. The delay, complications and expense encountered while carrying out the process established to accomplish these goals have given rise to the dispute before me. The overwhelming majority of “stakeholders” – a term I used advisedly given the disparate legal interests swept up into it – are now in favour of halting the severance process and selling the property en bloc.

[16] Only two of the original thirteen Founders wish to stay the course while only four of the original twelve non-Founder members chose to remain with LPAC and none of these have taken a firm position one way or the other. The two dissident Founders (Mr. John Lash and Mr. Peter Lash) are also the directors of LPAC and have directed LPAC to appear on this motion to oppose the proposed en bloc sale that the remaining Founders have directed the Receiver to take up and complete. My use of the term “dissident” here is not intended to ignore the fact that these two are entitled wearing their hats as directors to direct the conduct and affairs of the corporation unless and until the members collectively replace them or direct them in accordance with the by-laws of the corporation. In this proceeding, LPAC is speaking with a single voice directed by them.

(a) The Order of Penny J. dated October 31, 2016

[17] It is perhaps a measure of the degree of division within this extended family that even the task of settling the terms of Penny J.’s order of October 31, 2016 took almost six months. The formal order dated October 31, 2016 recites in a footnote that “the terms of this order incorporate supplementary reasons issued on November 24, 2016, and settlement terms of judgment released on March 17, 2017”. The Receiver advises me that it was actually taken out on April 16, 2017.

[18] Paragraph 1 of the order directed that “LPAC exchange the memberships of those members of LPAC that no longer wish to remain as members of LPAC … in accordance with the Buy-Out Terms in Schedule “A””. Penny J. expanded upon this concept with supplemental reasons released November 24, 2016 noting that the “objective of the exercise is to pay to the Departing Founding Members the same amount they would be paid if there was a full winding up of LPAC.”: Lash v. Lash Point Association Corp., 2016 ONSC 7358 (at para. 14).

[19] The Buy-Out Terms broadly contemplated a severance of the Lash Point Property into two or more parcels, one of which would incorporate the main family compound while the remaining parcels would be sold as needed to fund the fair market value buy-out of the Departing Founding Members. The steps needed to accomplish all of this would need a neutral third party to manage them. Accordingly, the Receiver was appointed over all of the assets of LPAC “for the purposes of implementing the buy-out of the Departing Members on the terms set forth in the attached Schedule “A””. The powers of the Receiver included the power to execute agreements of purchase and sale on behalf of LPAC for any of LPAC’s property “for the purposes of effecting the buy-out and the transactions as described” in the same Schedule “A”. The order contained the usual borrowing powers, protections from liability and indemnities found in such orders and authorized the Receiver to apply to the court for advice and directions in the discharge of its powers and duties.

[20] The brewing tensions that gave rise to this motion were not unanticipated in the Buy-Out Order and the reasons given by Penny J. Following the release of his reasons on October 31, 2016, the parties exchanged written submissions regarding the proposed terms of the order. In his November 24, 2016 supplementary reasons Penny J. declined to make a requested order for interim distributions to Departing Founding Members in the following terms (at para. 17):

While I sympathize with the leave camp’s desire for the earliest possible closure (and distributions to Departing Founding Members), particularly given the length of time this matter has dragged on since issue was first joined, it does not seem to me practical to make provision for interim distributions given various uncertainties, including very real concerns about tax liabilities. I therefore make no provision for interim distributions. The leave camp’s concerns may be addressed with the court if they are unhappy with the pace at which the valuation and sales process is unfolding.

[21] This general concept of permitting a subsequent re-examination in the light of progress made was picked up in s. 16 of the Buy-Out Terms as follows:

16. Any dispute, including but not limited to, a dispute with respect to: … (a.1) the value of the Property; … (c) the sale of the Lash Point Property by the Receiver; …(e) the pace at which the valuation and sales process is unfolding or any dispute arising from these terms, shall be determined by the Court on motion of the Receiver or a Founding Member made on fourteen (14) days’ notice to all Founding Members and, if applicable, the Receiver. The Receiver shall not participate in disputes among the Founding Members except as directed by the Court”.

[22] I shall now examine the “Buy-Out Terms” as laid out in Schedule “A”. This Schedule is comprised of 19 detailed paragraphs containing a step-by-step outline of the steps to be taken to cause the property to be divided and sold to satisfy the claims of the Departing Founding Members. These may be summarized for present purposes as follows:

a. LPAC is ordered to purchase the membership of any member who does not wish to remain a member. Members wishing to depart “will exchange their membership interest in the Corporation for proceeds of disposition equal to fair market value of their interest in the Corporation set out below”.

b. Those wishing to be “Remaining Members” were directed to make an election to that effect by May 31, 2017. Any member failing to so elect was deemed to be a Departing Member who had elected to have his or her membership purchased by LPAC, receiving in exchange “an undivided interest in the property” of LPAC “equal to the amount that the Departing Member would be entitled to receive on the liquidation of dissolution” of LPAC pursuant to its articles.

c. All Departing Members shall be paid $1 for their shares and cease to have rights to attend at the property beyond removing their personal property.

d. Departing Founding Members would also receive “from the proceeds of the sale of portion(s) of the Real Property” an amount equal to what the Departing Founding Member would have received on dissolution or liquidation of LPAC determined pursuant to a formula (described below).

e. The Receiver will attend to the severance of the LPAC property into two or more parcels. A “Retained Parcel” was provisionally designated (containing the original family compound) and a procedure established for the Remaining Members to finalize the boundaries of the Retained Parcel. The other parcels were to be designed for sale to generate cash proceeds to acquire the Departing Founding Members’ undivided interests. The Departing Founding Members would receive “an amount equal to the net value of the undivided interest in the Property that they contributed to the Corporation in 1996” based on (i) the appraised value of the Retained Parcel; and (ii) the sales proceeds of the severed parcels (including the Lower High Rock parcel that had already been severed by the time of the decision and was co-owned by the Corporation and the Founders).

f. To generate the required proceeds of sale, the Receiver was tasked to undertake the following steps:

i. Obtain an appraisal of the Property and a separate appraisal of the Retained Parcel.

ii. Supervise the development and finalization of a Severance Plan with input from the Remaining Founding Members as to the boundaries of the Retained Parcel and then input from the Departing Founding Members regarding the overall design of the Severance Plan (including the Retained Parcel), with any disputes arising being referred to the Court for determination.

iii. Once the Severance Plan is finalized, “take whatever steps are required to obtain a severance of the Lash Point Property based on the Severance Plan”.

iv. Engage a real estate broker to market the severed parcels for sale and complete such sales;

v. Following the completion of the sale of the severed parcels, obtain an updated appraisal of the Retained Parcel based on relevant market information including the prices paid for the severed parcels;

vi. Determine the “Required Payments” to be paid to each of the Departing Founding Members based on their entitlements on liquidation or dissolution with adjustments for the apportionment of the costs of the Receivership and court proceedings, real estate commissions, capital gains taxes arising and similar matters.

vii. Obtain the necessary clearance certificates from tax authorities to enable the Required Payments to be made and, upon receipt of such clearance, make the Required Payments to the Departing Founding Members.

[23] The foregoing summary telescopes somewhat the details of how the Severance Plan is developed in consultation with the Remaining Founding Members and the Departing Founding Members and all of the various adjustments made in calculating the Required Payments to ensure that these remain faithful to the governing principle of providing the Departing Founding Members with the cash equivalent to a wind-up or dissolution. The priority given to the Remaining Founding Members in devising the Severance Plan recognized, as Penny J. noted in his November 24, 2016 supplementary reasons, that the severance exercise is essentially a zero-sum game. Any accretions to the size or value of the Retained Parcel would reduce the sales proceeds available to pay out Departing Members but increase pro tanto the equalization payments needed to be funded by LPAC to make up the difference. LPAC was obliged to make the required equalization payment and the Receiver was authorized to sell the Retained Parcel after giving the corporation 60 days to pay if LPAC failed to do so.

[24] Section 14 of Schedule A also provided for the possibility of the Receiver being asked to sell the entire property en bloc if the Remaining Founding Members failed to accept the Retained Parcel or failed to provide an amended severance plan.

(b) Subsequent events

[25] The Receiver sent out the required election forms to the LPAC members prior to the May 31, 2017 deadline stipulated in the Buy-out Order. Only eight of twenty-five members elected to remain of whom four were Remaining Founding Members representing four-fifteenths of the undivided interests of the Founding Members. This amounted to less than one-third of the 25 members and less than one-third of the initial Founding Member interests in the property of the corporation.

[26] The relative weight of the Remaining Members compared to the Departing Founding Members matters because more than two-thirds of the property by value would need to be sold to generate the necessary proceeds to pay out the interests of the Departing Founding Members. Failure to generate this level of proceeds from sales of the severed parcels of the property would require LPAC to fund the shortfall with just the eight Remaining Members to look to. This in turn raised the prospect of the Retained Parcel being sold by the Receiver 60 days later if the corporation proved unable or unwilling to make the required equalization payment.

[27] This factor takes on increased importance here because based on appraisals the Receiver has obtained, the Retained Parcel as designed appears likely to be worth considerably more than one-third of the total value of the property. The Remaining Members thus face the prospect of having to fund an equalization payment of several million dollars directly or indirectly (i.e. through direct contributions or future ones to repay borrowed funds). This outcome ran contrary to the expectation of at least some Remaining Members who suggested that they hoped that no new money would be required from them in order to keep the Retained Parcel inside LPAC.

[28] The Receiver’s First Report dated March 30, 2017 (over two weeks before the Buy-Out Order was finalized) optimistically forecast that the Receiver would be able to complete all of the Buy-out steps and pay out the Departing Founding Members by the summer of 2019. This forecast was not advanced without caveats but it is indicative of the time frame that was in mind when the Receiver was appointed and the machinery to accomplish the buy-out process was being finalized and put in place. Indeed, Penny J. expressed surprise that the timeline indicated by the Receiver was as long as it was.

[29] The Receiver hit the ground running. It initiated a process to select an appraiser, engaging an appraiser in June 2017 after conducting a thorough selection process. A planner to asses with the severance process was selected (also in June 2017) after a similar process so that the appraisal and severance process could get underway in tandem.

[30] The appraiser delivered a draft report in early July and a final appraisal report on August 1, 2017. To this point at least the process appeared to be advancing swiftly towards completion.

[31] The process of arriving at a severance plan took considerably longer. While the first step was to finalize the boundaries of the Retained Parcel, the size and placement of the Retained Parcel within the entire lot would have obvious implications upon the design of any other parcels to be severed for the purpose of sale. After a significant amount of back-and-forth consultations, the Receiver concluded that the Remaining Members had accepted the design of the Retained Parcel by August 1, 2019. I shall not explain the reasons for the length of this delay. It is sufficient to observe that it occurred. My object here is not to attribute fault but to take stock of the current situation.

[32] The next step to finalizing the Severance Plan was to obtain the approval of the Departing Founding Members to the proposed Severance Plan incorporating the Retained Parcel as finalized. Discussions with the Departing Founding Members on this subject continued throughout the balance of 2019 with the Receiver ultimately applying to the Court to confirm the Revised Severance Plan that emerged from this process was binding upon all. That hearing was originally schedule for February 2020. Various intervening factors causing a delay in the scheduling of that hearing until March 2020. Then Covid reared its head. The revised Severance Plan was not ultimately approved by the Court until July 2, 2020.

[33] Other developments were occurring in tandem with these. Updated appraisals of the entire property and of the Retained Parcel were obtained in 2019 while the Severance Plan was being finalized. This was the catalyst for discussions among the Founders in the “remain” camp. As the magnitude of the equalization payments likely to be required from the Remaining Members sunk in, discussions of a Plan “B” emerged. In those discussions, some Remaining Members opined that it would be better to wait until the end of the severance and sale process to cross that bridge because of the sale costs would be borne by the Departing Founding Members.

[34] Financing the receivership proved to be a difficult process as well. The major banks declined the opportunity to provide financing to the Receiver. The process of securing funding was complicated by the lack of any cash flow to service it and the uncertain time horizon for receiving any funds through property sales to repay it. A private lender was located in September 2018. This credit facility had to be increased in July 2020. The borrowing under that facility stands at approximately $1.6 million today with the proceeds having been used to fund the Receivership to date.

[35] The Receiver’s credit facility falls due in September 2021 and the lender has indicated that it is unwilling to extend the time for repayment. If a sale is not ordered, the Receiver will have to seek another source of funding which search will face the same headwinds as the last one due to the lingering uncertainty about how long it will be before the Receiver can reasonably expect to receive sales proceeds in order to repay the loan. The current facility features a very high interest rate – there is no reason to expect a more advantageous result will be possible if the Receiver is required to find another lender.

[36] As noted, the approval of the Severance Plan and the extended financing was granted on July 2, 2020. In support of its motion to seek those approvals, the Receiver filed its Fourth Report. This report contained a summary of some of the hurdles remaining to be cleared before the Severance Plan could obtain the necessary approvals to enable sales of the proposed parcels to take place. The list is not a surprising one, but each of the named issues represents an obstacle that must be cleared whether through design changes, additional expense or simply delay. These include:

a. The matter of a road allowance and the necessity of coordinating that process with the severance process to avoid creating a Planning Act problem (recently approved by the township but awaiting further actions and surveys prior to being finalized);

b. The need to complete environmental impact assessment (ultimately obtained in October 2020 but with a number of conditions and comments that may need further action);

c. The risk of being required to conduct an archaeological survey; and

d. Potential delay or increased costs due to increasing levels of local resident association scrutiny of such proposals.

[37] As of the time of writing these Reasons, the severance process remains incomplete. The Receiver continues to estimate that at least a further two years will be needed before that can happen. There is some evidence that even longer may be needed from the Departing Founding Member camp but those suggestions must be tempered by the progress that has been made since the Receiver’s Fourth Report (especially as regards the environmental impact report and the road allowance issue). Additional time will be needed to run a sales process, determine whether LPAC is able to make the required equalization payments and potentially to sell the Retained Parcel. Three or more years may well be needed before payments to Departing Founding Members can reasonably be anticipated.

[38] Whether adjustments to the Severance Plan will be required along the way to obtain approvals and what impact such adjustments may have on value cannot be determined with any certainty at this time.

(c) The proposed agreement of purchase and sale

[39] The Receiver’s Notice of Motion seeks the Court’s direction with respect to the approval of a proposed Agreement of Purchase and Sale with Mr. Andrew Sheiner and Mr. Pasquale DiCapo. The following is a short summary of how the Sheiner/DiCapo Agreement came about.

[40] During the period prior to the July 2, 2020 court hearing, the Receiver began to receive inquiries from Departing Founding Members about the time the process has been taking and the advisability of proceeding to an immediate sale of the entire property rather than to continue to expend significant time and money on a Severance Plan that is two plus years away from approval. Departing Founding Members’ concerns were also raised concerning the cost of the financing being obtained and the overall unfairness to them of being frozen out of the corporation for such a long period of time while waiting to receive the purchase price of their interest.

[41] As well, the discussions within the “remain” camp about the size of the equalization payments had begun in 2019 and at least some of them were showing some desire to pursue a sale option.

[42] Two neighbours of the property (Mr. Sheiner and Mr. DiCapo) had long expressed an interest in buying parts of the property. Mr. Sheiner had previously indicated an interest in helping to fund the Receiver with a view to purchasing a portion of the property of particular interest to him.

[43] In June 2020, Mr. DiCapo indicated an interest in buying all of the property which was communicated to one of the Founding Members.

[44] The process was one in which many of the Founders participated in a variety of roles and from both sides of the “leave”/”remain” divide. Mr. Tim Lash prepared something of a prospectus that he presented to prominent real estate agents judged by him to the most active in the relevant areas. Mr. Peter Lash had discussions with one prominent agent representing Mr. DiCapo who was interested in an en bloc offer. The main relevance of these developments was that the potential for an en bloc sale began to be actively considered by both camps and this in turn elicited interest from potential buyers who were well aware of the existence of this large and largely undeveloped lot in such a prominent and well-heeled real estate market.

[45] The issue of the simmering discontent of the Departing Founding Members was raised before Dietrich J. without any specific request for relief at the July 2, 2020 hearing. Her endorsement approved the Revised Severance Plan and the increased financing but noted the Receiver’s acknowledgement of the unfairness to Departing Members due to the delay and its willingness to explore avenues with them of addressing this including by way of an interim distribution.

[46] On July 29, 2020, Mr. DiCapo submitted a formal offer to the Receiver. The amount offered was several million dollars lower than the price contained in the Sheiner/DiCapo Agreement currently before me. This initial offer generated interest among various of the Founders but more negotiation was needed.

[47] The parties came back before Dietrich J. at a case conference on August 7, 2020. Mr. Tim Lash again addressed what he perceived as injustices in the way the buy-out process was unfolding and was told that a case conference was not the right forum to address such concerns but that a motion would be needed.

[48] Negotiations and discussions between the Founders in both camps and Mr. DiCapo and other potential buyers and agents (some of whom made offers) continued on an active basis through the remainder of the summer and into the early fall of 2020. Mr. Tim Lash reached out to a number of prominent agents known to have the capacity to find buyers for such a large parcel as this. The Receiver, having no mandate to sell the entire property, was not involved in these negotiations although it certainly was aware of at least some of the details of them.

[49] Mr. Sheiner made his own offer as part of this evolving but informal process – his price was higher than Mr. DiCapo’s but still several million dollars lower than the value of the proposed Agreement before the Court today.

[50] Word of such things gets around in a small community and soon two other offers were also received. Negotiations were taking place between offerors and various of the Founding Members (both Departing and Remaining) and among the Founding Members themselves. At least some of the Remaining Founding Members were indicating an interest in getting an en bloc sale done instead of continuing on the current severance path.

[51] By early October 2020, Mr. Sheiner and Mr. Di Capo had joined forces and presented a new combined offer that improved upon both of their prior offers by several million dollars. The combined offer of Mr. Sheiner and Mr. DiCapo offered a number of “sweeteners” that increased its value to the Receivership beyond the face amount offered. These included assuming responsibility to pay the real estate commission of the agent who had been instrumental in bringing the offers together – an amount estimated at just under a half-million dollars. All nine Departing Founding Members signed letters of direction to the Receiver supporting this new combined offer. By October 17, 2020, two of the four Remaining Founding Members also signed the same direction (Mr. Tim Lorimer and the Estate of David Lorimer). Two of the four Remaining Founding Members voiced their opposition to the proposed sale (Mr. Peter Lash and Mr. John Lash) although one of them had been involved in trying to assemble an en bloc sale at a lower price earlier.

[52] Upon receipt of written evidence of support from almost 90% of the Founding Members, the Receiver agreed to have discussions with the proposed purchasers with a view to producing an Agreement of Purchase and Sale in a form the Receiver would be able to propose to the Court for its advice and directions. That process was pursued and produced the slightly revised Sheiner/DiCapo Agreement that is before me for directions and potentially approval.

[53] The Receiver makes no recommendation to the Court regarding the proposed sale agreement beyond factually informing me of how it came about and what alterations to the Buy-Out Order are likely required should the Receiver by ordered to accept and proceed to close it.

[54] The proposed Sheiner/DiCapo Agreement contains a number of relatively non-standard terms that enhance the value of the offer in the context of the Receivership to some degree. These may be summarized as follows:

a. As mentioned, the seller is not required to pay any real estate commissions any such fees being assumed by the purchasers;

b. The purchasers assume the risk – a risk the Receiver does not, it should be added, attach a very high value to – of paying HST;

c. The purchasers will pay the cost of pursuing the road allowance closure and the successful outcome of that process is not a condition; and

d. LPAC will not be subject to paying any “Parkland fees” that might otherwise be payable were the Revised Severance Plan to be pursued.

[55] I have been asked by the Receiver to refrain from discussing either the appraised values or the precise sale price in any public documents so as to avoid impairing any marketing process for the Lash Point Property or any part of it in future. That is a sensible precaution to take and one that requires only the gentlest of circumlocutions on my part to accommodate. I shall not reference either amount in these reasons. That does not mean that I have not reviewed the documents and taken note of the figures – I have done so.

[56] I find that the purchase price in the proposed Sheiner/DiCapo Agreement is substantially comparable to the appraised value obtained by the Receiver having regard to the value offered and the potential value of the enhancements mentioned above. Depending upon how things unfold, the proposed Agreement may produce a higher net recovery if compared to the appraised values or one that is only slightly lower. This conclusion is reached by me without considering the substantial costs that the Receiver has yet to incur, the risks that the severance and planning process will take longer or cost more to be completed than currently anticipated or the time value of money. The addition of those factors to the equation removes any shadow of a doubt regarding the comparability of the proposed Agreement with the range of likely values suggested by the appraisals the Receiver has received.

Issues to be determined

[57] Is there jurisdiction to order the Receiver to sell the property en bloc?

[58] If so, ought I to exercise my discretion to order the Receiver to sell the property en bloc?

[59] If so, ought I to order the Receiver to accept the proposed Agreement?

Analysis and discussion

(a) Is there jurisdiction to order the Receiver to sell the property en bloc?

[60] This court is vested with all necessary jurisdiction to make an order directing the Receiver to sell the subject property en bloc and to abandon the process of obtaining approval of the Severance Plan.

[61] The Buy-Out Order appointed the Receiver as an officer of the Court. A court-appointed Receiver is always acting subject to the direction of the court that appointed it. Paragraph 16 of the Buy-Out Terms specifically contemplated the potential for Departing Founding Members to come back to court for relief if delay in the process designed to raise the funds needed to pay for their membership interests set in. Rule 59.06(2)(a) of the Rules of Civil Procedure, R.R.O. 1990, Reg. 194 provides general jurisdiction to revise an order in light of facts subsequently discovered or arising. Amending an executory order such as a Receivership Order to take account of changing circumstances is not the same as appealing that order.

[62] I find that I have jurisdiction to direct the Receiver to halt the process of implementing the Severance Plan and to pursue an en bloc sale of the Lash Point Property. Nevertheless, the decision to do so must be arrived at starting with an analysis of the context and objectives of the order being varied (in this case, the Buy-Out Order) and considering the impact of the changed circumstances. This is a modification of an existing order, not an appeal of it.

(b) If so, ought I to exercise my discretion to order the Receiver to sell the property en bloc?

[63] Considering the objectives of the Buy-Out Order, the following features of that order appear to me to be important when answering this question:

a. The Receivership was established “for the purpose of implementing the buy-out of the Departing Members”. This does not diminish the importance of protecting the interest of LPAC and the Remaining Members in the Retained Parcel if reasonably possible but the Buy-Out Order established a paramountcy of interest and LPAC’s right to the Retained Parcel was always subject to the right of the Departing Founding Members to receive fair market value for their undivided interest in the land failing which the Receiver was directed to sell the Retained Parcel to raise the necessary funds.

b. While the Receiver might ultimately be required to sell the Retained Parcel, the Buy-Out Order did not vest a general discretionary power in the Receiver to change course and sell the property en bloc at any time or in its discretion. That decision requires input from the court.

c. Section 16 of the Buy-Out Terms does provide for the possibility of further orders being made in the event the pace of the sales process to generate the funds to pay the Departing Founding Members what they are owed is not proceeding at a reasonable pace;

d. The buy-out process was not self-executing. A court-appointed Receiver was needed to undertake the process in recognition of the diverse interests that needed to be kept in balance. That decision carries with it the usual trappings of receivership law including the continuing supervision of the Receiver by the Court as the circumstances evolve.

e. The Buy-Out Terms required the Departing Members to surrender their rights as members at the outset of the process but gave the Departing Founding Members in exchange an undivided interest in the property of LPAC equal to what they would receive on wind-up or dissolution of LPAC. The Departing Founding Members thus have a present proprietary interest in the very property being administered by the Receiver along with the interest of LPAC. Their interest in getting paid must be considered when assessing what the interests of justice require. LPAC is not the only stakeholder with an interest in the property. Indeed, LPAC has an undivided interest in only four-fifteenths of the Lash Point Property.

f. The process launched by the Buy-Out Order did not have a pre-determined deadline. Nobody could have expected that the timing of any process that entails navigating through the severance and planning procedures of a township could be predicted with a high degree of confidence or certainty. However, there were expectations as to what the process would likely entail. It was expected that completion of the process would require about two years – or about five years after the Departing Founding Members began the process of seeking an exit. It is reasonable to consider the “pace at which the … sales process is unfolding” (per paragraph 16 of the Buy-Out Terms) in light of those expectations. The delay factor is thus not a simple question of fixing a day when time is considered to be expired – the prejudice caused by delay is assessed along a continuum that must be balanced against all of the goals of the process including creating the Retained Parcel for the benefit of LPAC and its members. The relative weight of the competing interests shifts as circumstances change.

g. The goal of the process devised by Penny J. was quintessentially a compromise – provide one group of stakeholders with the economic equivalent of the wind-up some of them sought while providing the other group of stakeholders with the opportunity to keep the core of a property (to which they doubtless felt a strong connection) intact at the end of a severance process. However, as noted, discharging the obligation to pay the Departing Founding Members the fair value of their undivided interest in the land is ultimately the primary object of the severance process and that interest amounts to more than two-thirds of the value of the property as a whole. It was always contemplated that circumstances may require the sale of even the Retained Parcel if needed to pay the Departing Founding Members what they are owed.

[64] In my view, the circumstances have changed in a material way since the Buy-Out Terms were finalized and taking stock of those changes I am persuaded that alterations to the course first charted in 2016 are called for in the interests of justice. This is not a decision I reach lightly and it is one that I approach from the starting point that the presumptively correct course of action is to maintain the status quo unless the changed circumstances present a compelling reason to alter course.

[65] More than four years after the appointment of the Receiver, progress in implementing the sales process has been made but the timeline towards completion of the buy-out process continues to slip further into the future. The entire process was originally expected to require just over two years – itself coming at the tail end of almost three years of litigation by the parties seeking to withdraw their investment from LPAC. The decision of Penny J. did more than simply establish a severance process – it recognized the right of the Departing Founding members to depart and be paid fair value. Four years later, a further two years is estimated to be needed. That estimate remains subject to a number of contingencies that may extend that time estimate significantly, may challenge the viability of the process or may add materially to its cost. I am in no position to handicap the likelihood of the various contingencies raised having a material adverse impact on the process in future. What I can say is that the contingencies discussed by the Receiver in its Fourth and again in the Fifth Report are potentially significant and harmful to the interest of the Departing Founding Members to receive what they are owed within a reasonable time frame.

[66] The costs incurred to date and the additional costs anticipated also need to be considered. More than $300,000 of the Receiver’s approximately $1.6 million in expenses to date are attributed to interest on the high interest loan the Receiver has been obliged to resort to. Those interest costs will continue to accrue and will grow as more money is borrowed. The Receiver has estimated that it will need a further million dollars to complete the buy-out process based on the assumptions it has made. That figure does not account for the sales process costs such as sales commissions that will also need to be absorbed by the Departing Founding Members when the severed parcels are ultimately sold (if, as and when any parcels are actually severed and able to be sold). I shall refrain from mentioning the ratio of costs to sales proceeds in these reasons, but the likely final cost of selling some or all of the property and paying the Departing Founding Members is already a very material portion of the proceeds likely to be generated and that percentage will grow and grow materially if the present course is pursued. At some point the cost to the Departing Founding Members of enabling the Remaining Members to keep the Retained Parcel reaches an unreasonable level. The process was always going to be more expensive in absolute terms than an immediate sale en bloc would have been. It has grown to a very significant percentage of the prospective sales proceeds with very significant expenses, including sales commissions, yet to be incurred. The material growth in expenses and the way that impacts the two stakeholder groups differently is a consideration that I ought to consider.

[67] I have very little evidence of the state of expectations as to likely expenses in 2016-17 when the process was devised and finalized. However, I do have a great deal of experience with receiverships generally and the adage that “time is money” is quite literally true in the receivership context. The more time a receiver needs to accomplish its tasks, the more it will cost. This receivership is taking considerably longer than anticipated – even allowing for the lack of hard deadlines – and I infer from that fact that the expenses of the process are also exceeding initial expectations.

[68] I do not conclude that the severance process is bound to fail – far from it. I do conclude that the risks yet to be resolved are material despite the progress that has been made. While there is some chance of things proceeding faster than expected there appears to be an equal or even better chance of the opposite occurring. There is also a material chance that the costs of obtaining the severances needed to sell the property in parcels while preserving the Retained Parcel as desired will be greater than expected because discussions with municipal officials have not really begun in earnest. Stated differently – four plus years have succeeded in eliminating only some of the completion risk that was always inherent in the process selected. That there was risk in the process ordered was always a given. That so much of that risk should remain unresolved after this much time was not. That is a change in circumstance that I can and should consider.

[69] The Departing Founding Members are unpaid vendors with an existing undivided interest in the land that the Receiver is administering. Economically at least, that interest is significantly larger than the residual interest of LPAC. The Buy-Out Order contemplated the Departing Founding Members having to wait a reasonable amount of time to be paid. The fairness of causing them to lose access to the property for an extended period of time while being denied receipt of the proceeds to which they are entitled becomes harder to justify the longer the delay is extended.

[70] The prejudice of delay takes on greater weight when one considers that none of the Departing Founding Members are getting younger. The eldest of their number, Mr. Tim Lash will be approaching 80 years of age before he has any reasonable expectation of being paid based on the current time estimates. It is becoming less and less reasonable to require him to wait patiently on the side lines for payment as the tenth anniversary of when he first started the process to attempt to recover his inheritance approaches. The date on which Departing Founding Members will be able to take their proceeds and make their own arrangements keeps receding into the future while the Remaining Founding Members have maintained full use of the property and have no particular reason to accelerate the time when they will have to decide whether to fund the equalization payments (that will be quite material based on the Severance Plan). Further, even their annual costs of ownership have been mitigated somewhat by access to the proceeds of the Lower High Rock sale (even if those proceeds will eventually affect the calculation of the Required Payments and the equalization amounts).

[71] The goal of the Receivership was to pay the Departing Founding Members the value of their interest. Severance was the process selected to achieve that goal, but not at any price. If experience proves that the process is unable to see the Departing Founding Members paid their due in a reasonable time and at a reasonable cost, then the interest of those creditors in getting paid sooner from a sale of the land in which they have an undivided interest acquires greater weight. The process of severing the land and selling parcels is proving considerably longer, more uncertain and more expensive than anticipated. The Buy-Out Terms reserved to the Departing Founding Members the right to come to court and seek redress in that event. That too is a consideration that I must bear in mind.

[72] Less than one-third of the 25 members of LPAC elected to become Remaining Members and only four of thirteen Founding Members so elected. As with the question of delay, the Buy-Out Order was not premised on a pre-determined minimum ratio of Remain vs. Departing members. Nevertheless, the smaller base upon which equalization payments will fall plus the likely magnitude of those payments raises the reasonable likelihood that the Remaining Members may not agree to shoulder the burden of paying the required equalization payments (whether immediately or over time) causing the Retained Parcel to be sold by the Receiver.

[73] The potential likelihood of the Receiver being required to sell the Retained Parcel at the end of the day in order to repay the Departing Founding Members their due is relevant to a consideration of the fairness to unpaid Departing Founding Members of requiring them to wait still longer to be paid instead of directing the Receiver to conduct an immediate sale now.

[74] There is significant and largely uncontradicted evidence that the two Remaining Founding Members who (in their capacity as LPAC directors) have caused the corporation to advocate for the status quo course may well choose not to make the equalization payments needed after the severed lots are created and sold. The likelihood of the needed equalization funds being raised within LPAC without controversy or more litigation is further clouded over by the clear indication of dissent from two of the four Founders among the Remaining Members.

[75] On all values that might be ascribed to the Lash Point Property, the equalization payments required to be made would amount to several million dollars. This would have to be raised by contributions from LPAC’s members or financed by LPAC and paid by the members at a later date. There is evidence in the record from which I infer that some of the Remaining Members are undecided about whether they are willing to shoulder the required equalization payments but are not at all unhappy about the prospect of having several more years use of the property while they decide. That “option value” is a corollary of the process put in place by the Buy-Out Order. I do not characterize it as an illegitimate interest by any means. However, it is more in the nature of a by-product of the process than one of its goals. Such an interest carries considerably less weight than the growing weight of the interest of the Departing Founding Members to be paid the purchase price for their interest that has been deferred for so long and at such great expense.

[76] I do not conclude that it is probable that LPAC will not retain the Retained Parcel after a full severance and sale process runs its course. I conclude only that the passage of time and the events that have occurred have increased the likelihood of an eventual sale of the Retained Parcel by the Receiver materially. That increased likelihood is new fact and is something that should be considered when balancing the interests of the parties.

[77] The cost of financing and potentially re-financing the Receivership is a factor that also bears some weight. The Receiver has borrowed a considerable sum of money at a very high interest rate. As noted, approximately $300,000 of the debt incurred so far is in respect of interest costs. Unsurprisingly, the opportunity to invest in a process that throws off no cash flow to service debt, borrows further funds, has an uncertain timeline to repayment and is clouded at least in part by a history of litigation among the affected stakeholders has not produced a long line of lenders bidding to provide the needed credit to fund the Receiver at the lowest possible cost. I decline to say more only to avoid tainting future endeavours of the Receiver. There is no doubt that the property is worth far more than any amount the Receiver has or is likely to ever need to borrow based on the objective evidence. Clearly, this Receiver’s credit is a tougher sell than a simple Receivership of land held for sale without a precondition of severing it might be. Interest costs are material and growing.

[78] The current lender has given notice that it does not wish to renew. The Receiver must either generate sales proceeds quickly or find new financing before the mortgage falls due in early September. An immediate sale en bloc would generate proceeds of sale sufficient to retire the debt and solve the financing problem. I do not assume that the window to refinance is closed already – to the contrary, I assume the Receiver will do what it needs to do and I am confident that this Receiver has the expertise to get the job done on the best terms available. However, there will be costs and risk involved and both are factors that must be weighed in the balance.

[79] Finally, the convergence between the likely proceeds of an en bloc sale and those that may arise from a severance is a further factor to be taken into account. I mention this factor while cautioning that it is one to which I attach only a relatively small amount of weight. The compromise solution devised by Penny J. could have been a win-win solution. It is often true in the real estate business that land is worth more if severed and sold in pieces than if sold together en bloc. The evidence in this case suggests that these two values are converging. The valuation evidence suggests that the potential value of the Retained Parcel plus that of the parcels yet to be created through the severance process is the same or possibly less than the proceeds available from an immediate en bloc sale. At this point, the upside of continuing to pursue severance is appearing more and more speculative. That consideration also bears some weight but I must of course temper that with the degree of speculation that goes into almost every element of that calculus.

[80] Considering all of these factors in total, I conclude that a compelling case has been made out to modify the Buy-Out Terms in Schedule A to the order of Penny J. and order an immediate sale. The Departing Founding Members have already been delayed longer and subjected to greater expense while waiting to be paid than is reasonable and the additional delay and expenses anticipated puts that conclusion beyond debate. The Receiver shall be instructed to pursue an en bloc sale of the property without delay and to defer further pursuit of the Severance Plan for the time being.

[81] I am directing the Receiver to take no further steps pursuant to s. 6(b) and s. 7(d.1) of the Buy-Out Terms but instead the Receiver shall be directed to sell the entire Lash Point Property as soon as practicable.

[82] I must now consider whether the Receiver ought to be directed to close the proposed Sheiner/DiCapo Agreement in hand or whether a new and more organized process to seek a purchaser ought to be undertaken.

(c) If so, ought I to order the Receiver to accept the proposed Agreement?

[83] I preface this portion of my reasons with the observation that it will be a rare day that a court-appointed Receiver will be directed to complete a sale transaction negotiated after the Receiver was appointed but effectively[^1] without input from either the Receiver or the court. The principles governing the approval of sale agreements in a receivership context restated by the Court of Appeal in Royal Bank of Canada v. Soundair Corp., 1991 CanLII 2727 (ON CA) have three decades of consistent precedent to recommend them and, were that not sufficient, the weight of good sound common sense as well.

[84] In Soundair, the Court of Appeal outlined four criteria which our courts have long considered to be the proper basis upon which to consider approving a sale of assets in a receivership: (i) whether the receiver has made a sufficient effort to get the best price and has not acted improvidently; (ii) the interests of all parties; (iii) the efficacy and integrity of the process by which offers were obtained; and (iv) whether there has been unfairness in the working out of the process. These principles were not new in Soundair and have governed such proceedings for many, many years.

[85] Having made the determination that the severance process should be halted in favour of an immediate en bloc sale, I must consider whether the Receiver ought to be directed to devise a process for finding an acceptable offer and follow it or, in the alternative, whether the Receiver ought simply be directed to accept and complete the Sheiner/DiCapo Agreement.

[86] Now that the Lash Point Property is being sold en bloc instead of in severed parcels, the interests of LPAC and the Departing Founding Members have converged and are essentially financial in nature. If there is to be no Retained Parcel, then LPAC and the Departing Founding Members both have an interest in the pot of proceeds of sale being as large as reasonably possible.

[87] The Sheiner/DiCapo Agreement cannot reasonably be held up as satisfying any of the Soundair principles. The Receiver has played a limited role in refining the terms of the document but until now has had no mandate to sell the property as a whole and has thus expended no efforts to obtain the highest and best price. While the parties who have collectively played a hand in bringing the Sheiner/DiCapo Agreement to the table have the same interest in seeing the highest price, there has been no orderly process to speak of that has given rise to the agreement before the court.

[88] The foregoing considerations would tend strongly to indicate that I should reject the Sheiner/DiCapo Agreement and direct the Receiver to retain a qualified broker and conduct a proper canvass of the market. However, there are considerations unique to this case that tilt the scales the other way. I consider the most important of these to be the following:

a. The features of the Lash Point Property – its size, its location and its relatively undeveloped state – make it attractive to a relatively specialized portion of the Muskoka real estate market;

b. The purchase price in the Sheiner/DiCapo Agreement is considerably higher than any of the offers generated by the informal process that took place in 2019 and 2020 described earlier;

c. The purchase price in the Sheiner/DiCapo Agreement compares very favourably to the updated appraisal evidence obtained by the Receiver particularly having particular regard to the sales and severance expenses avoided by this transaction;

d. The purchase price in the Sheiner/DiCapo Agreement is significantly in excess of prices that at least one of the two Remaining Founding Members currently opposing the sale indicated was at least potentially an acceptable price;

e. That same Remaining Founding Member was actively involved in the process of soliciting interest from potential purchasers of the entire property in 2019-2020 resulting in a prior offer from Mr. DiCapo on his own that was significantly lower than the price contained in the Sheiner/DiCapo Agreement;

f. While far from orthodox or thorough, the informal if somewhat unusual canvassing of the market undertaken by various of the Founding Members in 2019 and 2020 did ensure that a broad cross-section of likely interested buyers in a relatively narrow and specialized market was given an opportunity to make an offer and several parties did so;

g. The Sheiner/DiCapo Agreement is a relatively “clean” offer that should be capable of being completed in short order and in sufficient time to avoid the necessity of obtaining further expensive financing;

h. While there may be sufficient time to conduct a proper sales process for the Lash Point Property this season, the window for such sales is at least partially seasonal and that selling season is nearing its end;

i. There is no evidence that any of the Founding Members has any interest in the Sheiner/DiCapo Agreement apart from the common financial interest of all in obtaining the highest price obtainable; and

j. The overwhelming majority of the stakeholders with an interest in obtaining the highest price available have directed the Receiver in writing to seek approval of the Sheiner/DiCapo Agreement indicating their satisfaction with its terms including price[^2].

[89] I should expand upon the last two points as they are far and away the most material.

[90] As I have noted, given my decision that the Lash Point Property ought to be sold, all stakeholders have the same essentially financial interest in obtaining the highest price obtainable. They may have different opinions about how to obtain that highest price, but the bigger the pie, the bigger the slices. To the extent there is a subsisting conflict of interest as among the Founding Members it lies in the fact that the two Remaining Founding Members who have indicated opposition to accepting the transaction also have an interest in the status quo persisting for as long as possible to permit them to continue to use the property. The support of the Sheiner/DiCapo transaction by the overwhelming majority of those with an interest in the size of the pie generated by the completion of that sale being as large as possible is powerful and convincing evidence of the fair market value nature of the proposed transaction.

[91] This transaction is clearly not a perfect proxy for a transaction generated using the Soundair criteria but, on balance, it is a reasonable substitute. Given the relatively unique characteristics of the property, an effort to contact those most likely to be in a position to make an offer to acquire it was undertaken. A cross-section of Founding Members from both camps was involved in that informal process. The integrity of the process leading to the proposed transaction is of lesser importance where all parties – including potential offerors – knew that the process was an informal one being conducted by stakeholders with an interest in the outcome but that the Receiver was of necessity unable to participate in it. The cumulative impact of the criteria I mention above gives strong indications that a fair market value offer emerged from this process despite its undoubted warts.

[92] It is possible that a fresh marketing process conducted by the Receiver might generate a higher price. It is also possible that it might generate lower proceeds. There are risks in both directions. The factors as I have listed them above strongly suggest that the chance of a higher price surfacing from a fresh process supervised by the Receiver is a muted one. Those chances would have to be discounted by the selling costs and sales commissions to be incurred by the Receiver and the potential additional financing costs to the Estate entailed by a delayed closing among others.

[93] The circumstantial evidence that the Sheiner/DiCapo Agreement reflects current fair market value is strong. On the other hand, the downside risks inherent in testing that proposition are difficult to quantify. The strongly expressed and near unanimous opinion of those most directly interested in the decision is entitled to considerable weight and that opinion is strongly ranged against throwing the dice to find out.

[94] It matters little whether I count the support for the transaction as being at the level of 73% (the undivided interest of the Departing Founding Members) or 87% (including the two Remaining Founding Members who have effectively changed camps to support the transaction). While the interest of the two Remaining Founding Members is somewhat more diffuse by reason of their being current members of LPAC whose directors have opposed this transaction, their status as Founding Members with a potential interest in half of the proceeds to be received by LPAC in the event of a wind-up or dissolution of LPAC warrants at least some consideration.

[95] The Receiver has been very careful of ensuring its even-handed treatment of stakeholders. While the Receiver took no position on whether I ought to order an en bloc sale of the Lash Point Property, I did ask the Receiver what the recommendation would be were I to make such an order. In that event, the Receiver advised that given the signed directions in hand, the Receiver’s recommendation would be to proceed with the transaction desired by such an overwhelming majority of the people entitled to a share in its proceeds. It is they who would suffer the downside should the results be less favourable and it is they who would be foregoing the possibility of a better return arising from a fresh process.

[96] In the circumstances, I am satisfied that the benefits to the Receivership of accepting the Sheiner/DiCapo Agreement are more compelling than is the chance of improving upon it in a fresh sales process supervised by the Receiver. On these unique facts and in this case, the bird in the hand is preferable to the two that may be in the bush. I am directing the Receiver to accept the Sheiner/DiCapo Agreement and to proceed to close it as soon as practicable.

Disposition

[97] Accordingly, Schedule A to the Buy-Out Order dated October 31, 2016 shall be amended consistent with the following:

a. The form of the Agreement of Purchase and Sale (the “Purchase Agreement”) between Andrew Sheiner and Pasquale DiCapo (together, the "Purchaser") and the Receiver, and the transaction contemplated therein (the "Transaction") is approved;

b. The Receiver is authorized to execute the Purchase Agreement and to complete the Transaction as soon as practicable;

c. On closing of the Transaction, subject to the terms of the Purchase Agreement, all of the right, title, and interest of LPAC in and to the Lash Point Property shall vest in the Purchaser and the Receiver shall be authorized to apply for a vesting order confirming same;

d. Subject to further order of the Court, the Receiver is directed to cease further actions pursuant to s. 6(b), s. 7(d.1), (e) and (f) of Schedule “A” to the Buy-Out Order; and

e. Section 7(g)(i) of Schedule “A” to the Buy-Out Order shall be deleted and replaced with the following: “The Required Payment shall be determined based on the purchase price realized for the sale of the Lash Point Property and the Corporation’s interest in Lower High Rock”.

[98] An order shall issue authorizing the Receiver to redact Confidential Appendix "I" from the Fifth Report of the Receiver, dated March 2, 2021 (the "Fifth Report"), and sealing Confidential Appendix “I" until the earlier of August 31, 2021, the closing of the Transaction or further order of the Court.

[99] Following completion of the Transaction, the Receiver shall prepare a report outlining a preliminary calculation of the Required Payments prepared pursuant to the Buy-Out Order as amended hereby and shall compile a list of issues upon which directions may be required to complete and finalize such calculation. Such Report shall also contain a calculation of an appropriate level of reserves with a view to recommending a prudent level of interim distributions to the Departing Founding Members and LPAC as soon after completion as practicable.

[100] The Receiver shall bring a motion for further directions to this Court as soon as practicable following completion of the Transaction and preparation of the Report directed by the preceding paragraph.

[101] Costs of the parties to this motion with the exception of the Receiver (whose costs are already provided for in the Buy-Out Order) shall be reserved to be spoken to when the Receiver brings the motion for directions contemplated in the preceding paragraph.

S.F. Dunphy J.

Date: June 24, 2021

[^1]: The Receiver did have some minor input in finalizing the terms but after the direction supporting the proposed transaction from parties representing 11 or 13 fifteenths of the relevant interests were in hand.

[^2]: I am aware that the Receiver negotiated the form of the Sheiner/DiCapo Agreement after the directions from Founding Members were received in October 2020 and that the outcome of those negotiations as to the form of the agreement included a very minor downward revision of the price offset by the assumption of certain potentially material risks by the prospective purchasers.