Court File and Parties

COURT FILE NO.: CV-22-00684037-00CL DATE: 20230419 SUPERIOR COURT OF JUSTICE – ONTARIO (COMMERCIAL LIST)

RE: HANDS-ON CAPITAL INVESTMENTS INC., IAM INVESTMENTS INC. and CANADIAN REAL ESTATE CAPITAL CORP., Plaintiffs AND: DMCC HOLDINGS INC., MSR INC., DMCC COMMERCIALS INC., MSR APARTMENTS INC., MSR MANAGEMENT INC., 2229978 ONTARIO LTD., 2217109 ONTARIO LTD., 2268989 ONTARIO INC., 2382760 ONTARIO LTD., DMCC AMERICAS INC. (ONTARIO), DMCC AMERICAS INC. (U.S.), 2105602 ONTARIO LIMITED, 2295716 ONTARIO LTD., 2268989 ONTARIO LTD., DMCC MANAGEMENT 1, INC. (ONTARIO), DMCC MANAGEMENT 1, INC. (U.S.), DMCC PERFORMANCE 1 TRUST, DMCC PERFORMANCE 1, INC., DMCC PERFORMANCE 2, INC., DMCC PERFORMANCE 1, LP, DMCC 26TH AVE LLC, DMCC 62ND AVE LLC, DMCC 450 CHARLES COURT LLC, DMCC 4705 ALT 19 LLC, DMCC 9000 GOLFSIDE DRIVE LLC, DMCC 9109 BAYMEADOWS LLC, DMCC CENTRAL AVE LLC, DMCC CHARLES LLC, DMCC COLONIAL LLC, DMCC EDGEWATER LLC, DMCC HERMITS TRAIL LLC, DMCC HIGHWAY 19 LLC, DMCC TECH BLVD LLC, DMCC WESTMONTE LLC, NARINDER SEEHRA and PRADEEP KUMAR MATHAROO, Defendants

BEFORE: Kimmel J.

COUNSEL: Harvey Chaiton / Chris Staples / Laura Culleton, for the Plaintiffs, Hands-On Capital Investments Inc., IAM Investments Inc. and Canada Real Estate Capital Corp. Bevan Brooksbank / Monica Kozycz, for the Defendants, DMCC Fund Defendants: DMCC Management I, Inc. (Ontario), DMCC Management 1, Inc. (U.S.), DMCC Performance I Trust, DMCC Performance 1, Inc., DMCC Performance 2, Inc., DMCC Performance 1, LP, DMCC 26th AVE LLC, DMCC 62ND Ave LLC, DMCC 450 Charles Court LLC, DMCC 4705 ALT 19 LLC, DMCC 9000 Golfside Drive LLC, DMCC 9109 Baymeadows LLC, DMCC Central Ave LLC, DMCC Charles LLC, DMCC Colonial LLC, DMCC Edgewater LLC, DMCC Hermits Trail LLC, DMCC Highway 19 LLC, DMCC Tech Blvd LLC and DMCC Westmonte LLC Christopher Somerville, for the Defendants, DMCC Corporate Defendants: DMCC Holdings Inc., MSR Inc., DMCC Commercials Inc., MSR Apartments Inc., MSR Management Inc., 2229978 Ontario Ltd., 2217109 Ontario Ltd., 2268989 Ontario Inc., 2382760 Ontario Ltd., DMCC Americas Inc. (Ontario), DMCC Americas Inc. (U.S.), 2105602 Ontario Limited, 2295716 Ontario Ltd. and 2268989 Ontario Ltd. Mary Elizabeth (Liza) Quail, for the Non-party Fund Investors: Ariff Harjee and Minaz Ladha Somji,

HEARD: February 24, 2023 and March 24, 2023

Endorsement (Receivership Motion)

The Motion

[1] This is an action upon promissory notes purportedly signed by all of the defendants for the repayment of unsecured loans advanced by the plaintiffs to certain of the DMCC Corporate Defendants. The plaintiffs also seek relief under the s. 248 of the Business Corporations Act, R.S.O. 1990, c. B.16 (the “OBCA”) oppression remedy.

[2] The plaintiffs move for the appointment of a receiver over the DMCC Group of companies [1] to oversee the winding-up and termination of the DMCC Performance 1, Trust (the “Trust”) and the distribution of the Trust’s assets to its creditors and unitholders (also referred to as investors).

[3] The motion was brought after the Administrator of the Trust delivered a notice of its intention to wind-up the Trust in June of 2022.

[4] For the reasons that follow, I am granting the plaintiffs’ request for the appointment of a receiver under s. 101 of the Courts of Justice Act, R.S.O. 1990, c. C.43 (“CJA”) but limiting the receivership for the time being to: DMCC Management 1, Inc. (Ontario), the “Administrator” of the Trust, DMCC Management 1, Inc. (US), the general partner (the “General Partner”) of the Partnership (defined below) that owns the ultimate Trust properties in Florida, and DMCC Americas Inc. (Ontario) (“DMCC Americas (Canada)”), one of the companies that the plaintiffs loaned monies to that indirectly owns a 51 percent interest in the Partnership through Class C units. The Trust (and its investors) indirectly owns a 43 percent interest in the Partnership through Class A units.

The Parties

[5] The DMCC Corporate Defendants and the DMCC Fund Defendants (collectively referred to as the “DMCC Group”) are related entities. Their relation stems from the fact that they are managed and controlled by the individual defendants, Narinder Seehra (“Seehra”) and Pradeep Matharoo (“Matharoo”). Certain of the DMCC Corporate Defendants own and manage 17 income-producing commercial properties located in Florida, consisting mainly of medical offices (the “Florida Properties”).

[6] The DMCC Group includes the Trust (formed in Alberta) and the DMCC Performance 1, LP (the “Partnership”) a US limited partnership formed under Florida law. Together, the Trust and the Partnership comprise a “Fund” in which there are investors. The plaintiffs and other public investors hold Class A units of the Trust and Seehra and Matharoo hold Class C units of the Trust. The DMCC Group was formed as part of a 2018 corporate reorganization. At the time of the reorganization, there were only ten Florida Properties; seven have been acquired since then.

[7] The “Fund Defendants” are comprised of the Trust and the Partnership and related entities (such as the Fund Administrator, the General Partner and entities through which they operate), and the 17 Delaware LLCs through which the Partnership holds the Florida Properties. The Florida Properties are the primary assets and source of income and value for the Trust and its investors.

[8] There are a number of other Ontario corporations that the defendants say are not directly involved in the “Fund”, which they refer to as the “Non-Fund Corporate Defendants.” They are defined herein as the DMCC Corporate Defendants. All of the defendants are purported signatories to the disputed September Promissory Notes (defined below).

[9] A simplified depiction of the ownership and management structure of the DMCC Group, as presented by the defendants, is as follows:

[10] This summary structure includes all of the Fund Defendants. It also includes two DMCC Corporate Defendants: DMCC Americas (Canada) one of the direct recipients of funds loaned by the plaintiffs and the parent company to DMCC Americas. Inc. (US) (“DMCC Americas US”), the property manager of the Florida Properties and the entity with a 51% controlling interest in the Partnership.

[11] Seehra and Matharoo are officers and directors of all of the DMCC Corporate Defendants. They also hold direct and indirect equity interests in all of the DMCC Group companies. They own, control and manage the Administrator of the Trust, the General Partner and the property manager.

[12] The plaintiffs, Hands-On Capital Investments Inc. (“HCII”) and IAM Investments Inc. (“IAM”), are corporations owned or controlled by Iqbal Moledina (“Moledina”).

[13] HCII, together with Moledina personally, members of his family and another Moledina company, IM Hospitality Inc. (“IM Hospitality”), are together significant unitholders in the Trust.

[14] HCII and IAM contend that all of the defendants, including the Trust and Partnership, are indebted to them by virtue of promissory notes signed in September 2019 by the DMCC Group companies in favour of each of HCII (one in CDN and one in US funds) and IAM (together the “September Promissory Notes”). [2] The principal debtor companies under the underlying loan agreements are DMCC Americas (Canada) and DMCC Holdings Inc.

Overview of the Claims and Defences

The Plaintiffs’ Claims for Repayment of Debt and the Disputed Promissory Notes

[15] In their capacity as lenders, HCII and IAM seek recovery of unsecured demand loans that have matured and upon which demand has been made, together with outstanding fees, in the principal amounts of approximately $8.3 million CDN and $1.9 million USD.

[16] The September Promissory Notes purport to make the listed DMCC Group entities responsible for the repayment of the plaintiffs’ loans advanced to DMCC Americas (Canada) and DMCC Holdings Inc. Seehra signed and/or initialed the September Promissory Notes on behalf of each DMCC Group company. Seehra and Matharoo also both signed these promissory notes personally. Seehra and Matharoo claim to have no recollection of signing the September Promissory Notes or of the circumstances leading up to them being signed.

[17] Earlier in this litigation, the DMCC Group challenged the authenticity of the signatures on these September Promissory Notes. However, after the plaintiffs secured a handwriting expert opinion indicating that the signatures and initials of Seehra and Matharoo on the September Promissory Notes were probably authentic, that challenge was dropped.

[18] The defendants still challenge the validity/enforceability of the September Promissory Notes on other grounds. Seehra and Matharoo deny that they understood that they had signed documents that would render any of the DMCC Group entities liable to repay the plaintiffs’ loans other than the two companies identified as having received the loan advances from the plaintiffs (DMCC Americas (Canada) and DMCC Holdings Inc.). They challenge the plaintiffs’ contention that any of the other defendants are liable to repay the underlying loans.

The Plaintiffs’ Oppression Remedy Claims

[19] In their capacity as investors in the Trust and lenders to various DMCC Group entities, the plaintiffs seek oppression remedies resulting from the actions of the individual defendants and the conduct of the companies that they directed. The complaints are predominantly focused on financial disclosure, which the plaintiffs allege has been inadequate. The plaintiffs also raise a concern that their asserted interests as unsecured creditors of the Trust (under the disputed September Promissory Notes) have not been historically recognized and will not be treated fairly in the winding up of the Trust and the distribution of its assets to stakeholders.

[20] Despite the financial reports of improving rental revenues from the Florida Properties (after 2019) and the defendants’ insistence that the Fund remains solvent, the plaintiffs’ concerns about financial disclosure arise because:

a. The financial statements for the Trust disclose much higher than projected expenses and losses compared to the profit levels for the fiscal years 2019-2021 in the Offering Memorandum dated October 22, 2018 (the “OM”) that was distributed to prospective investors in the Trust. b. The Trust first reduced the historic 8 percent quarterly dividend and then eventually stopped paying it in the second quarter of 2021. c. Redemptions have been satisfied, at least in part, by notes rather than cash. d. Mortgages secured over the Florida Properties have matured and remain outstanding.

[21] The plaintiffs recognize that all dividends and distributions to investors are discretionary. Further, they acknowledge that there was no guarantee that the Fund would perform in accordance with the original projections in the OM, which included customary disclaimers. The plaintiffs nonetheless seek information and explanations by way of disclosure that they say has not been forthcoming. As significant, albeit unsecured, creditors (of at least some of the DMCC Group companies and the Trust under the disputed September Promissory Notes) and significant investors in the Fund, the plaintiffs have been making demands for financial information relating to the Fund and its performance since September of 2021.

[22] The defendants insist that the plaintiffs have been provided with all financial and other disclosure that they are legally (contractually) entitled to receive either as lenders or investors. They add that the plaintiffs are not being treated unfairly or differently than others similarly situated to them and that to provide what they ask for would be to give them preferential treatment over others.

[23] The plaintiffs commenced this action on March 18, 2022. They amended it on May 27, 2022 to add the oppression remedy.

The Trust Declaration and Wind-Up Notice

[24] On June 22, 2022, after the plaintiffs commenced this action, unitholders were given written notice, in accordance with the Trust Declaration (defined below), of the intention to commence a wind-up of the Trust (the “Wind-up Notice”). The within motion for the appointment of a receiver was brought shortly after the Wind-up Notice was sent out.

[25] Article 14.3 of the Declaration of Trust dated August 2, 2018 (the “Trust Declaration”) gives the Administrator the right, authority and absolute discretion to commence the wind-up of the affairs of the Trust at any time, upon 45 days’ notice.

[26] In the Wind-up Notice, investors were reminded of the long term objectives set out in s. 2.4 of the OM that they received at the time of their investment, including that:

It is the current intention of the Partnership to refinance or sell the Properties after five years and distribute to holders of Class A Partnership Units and Class B Partnership Units the proceeds of any such refinancing or sale. After such time, the Trust will be wound-up and the holders of Class A Trust Units and Class B Trust Units will have no interest in the Trust and no indirect interest in the Partnership or the Properties. Holders of Class C Partnership Units will continue to maintain their interest in the Partnership. The holder of the Class C Partnership is Americas US. There can be no assurance that such refinancing will occur or that the Partnership or the Trust will meet its stated objectives.

[27] Pursuant to Article 14.5 of the Trust Declaration, the Trustee and the Administrator are required “…to wind-up the affairs of the Trust as soon as may be reasonably practicable and for such purpose shall sell and convert or cause to be sold and converted into money the assets comprising the Trust, including, without limitation, the Trust Fund.” The Trustee is The Computershare Trust Company of Canada, a Canadian federally incorporated trust company licensed under the Trust and Loan Companies Act, S.C. 1991, c. 45.

[28] Article 14.6 of the Trust Declaration permits a distribution to unitholders upon the winding up of the Trust after known liabilities and obligations of the Trust have been satisfied, discharged or indemnified.

[29] The Wind-up Notice informed investors that the Administrator had determined that it was appropriate to commence the refinancing or sale process of the Partnership assets so that the proceeds of such could be distributed out to Trust unitholders. It also cautioned that it was not possible to establish a definitive date for the termination of the Trust until the refinancing or sale process had been finalized. Investors were further told that they would not be surrendering their units upon the effective termination of the Trust (as contemplated by the Trust Declaration) because the units are held in uncertified form. Instead, there would be a final cash distribution to all remaining investors at the then fair value of those units at the end of the refinancing or sale process, after which their units would be redeemed and cancelled. The termination date for the Trust was indicated to be uncertain and subject to extension in the discretion of the Administrator.

Refinancing Efforts

[30] The Florida Properties are the Trust’s only (indirect) assets. They stand as security for substantial mortgage debt, the satisfaction of which will take priority over any distributions to the unitholders in the wind-up. Mortgages of approximately $5.8 million USD secured against the Florida Properties matured in October 2022 and remain unpaid. Another mortgage in the principal amount of $975,000 USD has recently gone into default. A third mortgage comes due in June 2023 and a blanket mortgage over 10 of the Florida Properties, with a principal balance of approximately $16,000,000 USD, will mature in October 2023.

[31] The only refinancing proposal that the defendants have presented since the Wind-Up Notice is one that the plaintiffs objected to because it involved a significant cost that would be borne by investors. The Fund Defendants brought a motion to vary the order of Gilmore J. dated July 25, 2022 (the “Interim Order”) that restrained them from selling, encumbering or refinancing any property of the Trust, specifically the Florida Properties, without the plaintiffs’ consent or leave of the court.

[32] Conway J. denied leave to refinance in her endorsement of October 31, 2022:

Two of the US lenders to the Trust, Baird and Axiom, have advised that their secured loans must be paid out in October 2022, in the amount of approximately $5.2 million. Because of the cross-collateralization arrangements in place on the Florida Properties, all existing mortgages on those properties need to be refinanced, in the amount of approximately $29.2 million. The Moving Parties seek to refinance in the amount of $30.5 million (which they say is at a more favourable interest rate).

After hearing submissions from both sides, I dismissed the motion… My reasons for doing so are:

The Trust is in the process of being wound up. This is not a case of refinancing in the ordinary course of business where the refinancing is required to continue operating the business. It must be viewed in the context of the present status of the Trust, which is not operating and is in the course of being wound-up.

The refinancing of the $500,000 Axiom loan will trigger an early prepayment penalty to Deutsche Bank of approximately $3 million (the loan is not due until October 2023). Mr. Brooksbank, for the Moving Parties, conceded this fact at the hearing. In my view, an additional payment of $3 million to discharge a $500,000 loan is disproportionate and I cannot see how it is to the benefit of the unit holders of the Trust. On this basis alone, the motion must be dismissed.

The additional $1.3 million in the refinancing is to cover future fees that have not been incurred. It appears to cover, among other things, future legal fees to fund this litigation. I am not persuaded that this is an adequate justification for the increase in the secured debt that will have priority over the unitholders’ interests. I am also not persuaded that these costs cannot be paid out of Trust income rather than increasing secured debt.

Mr. Staples concedes that if the existing Baird and Axiom mortgages were being refinanced on a dollar for dollar basis, he would have difficulty objecting to the refinancing. However, he submits that there is little justification for refinancing that results in an additional $4 million of secured debt standing ahead of the unitholders (and the Responding Parties as creditors). I agree. I am simply not persuaded that an increase of $4 million in secured debt in order to avoid default proceedings by the Baird and Axiom mortgagees works to the benefit of the Trust’s stakeholders nor am I persuaded that failure to refinance on these terms is prejudicial to the Moving Parties or the unitholders.

[33] The evidence of Seehra is that there is currently no viable prospect of a refinancing or significant equity investment. Without this, the plaintiffs are concerned that the DMCC Group will be without the ability to repay or refinance these mortgages. This, in turn, could imperil the Florida Properties, the primary assets of the Trust and the only source of recoveries for the investors in the Fund, after satisfaction of the claims of secured creditors and any established unsecured creditor claims.

[34] While the defendants argue that their efforts to refinance the Florida Properties have been stymied by the plaintiffs (and this litigation), it is not entirely clear why that is so. They appear to blame this on the need for leave under the Interim Order, although that did not impede the refinancing proposal for which approval was sought. The plaintiffs conceded at that time that they would be hard pressed to object to a dollar for dollar refinancing, but none has been proposed.

[35] Nor have the defendants offered any plausible explanation for how or why this litigation would prevent the sale of the Florida Properties. The defendants have not satisfied the court of any meaningful efforts they have undertaken to sell the Florida Properties or to assess what the potential recoveries might be from such a sale.

The Plaintiffs’ Concerns About Seehra and Matharoo

[36] The plaintiffs agree that the Trust should be wound up. However, the plaintiffs contend that the DMCC Group, under the management and control of Seehra and Matharoo, should not be permitted to oversee the wind-up.

[37] Given the mortgage defaults to date and the lack of a concrete plan for the sale or the refinancing of the Florida Properties, and the limited (contractually compliant) financial reporting that the Trust has provided, the plaintiffs are concerned about the financial circumstances of the Trust and its ability to repay all established creditors and maximize any remaining value for investors.

[38] According to the Trust’s Q1/Q2 2022 report, Seehra and Matharoo intend to cause the repurchase of investor’s units in the Trust using funds to be raised through a new US affiliate to be created by the DMCC Group and owned by them. There is a dispute between the parties about whether this is a permissible wind-up plan under the Trust Declaration. In the meantime, there is no evidence of concrete steps being taken to raise the necessary funds. This appears to be merely aspirational.

[39] Seehra and Matharoo are officers, directors and shareholders of various DMCC Group companies that have contracts with the Trust and/or the Administrator. These companies have received restructuring, acquisition and management fees under contractual arrangements with the Partnership and the Trust and may continue to do so. Seehra and Matharoo are the beneficiaries of these fees and they continue to draw salaries from some of the DMCC Group entities involved in the management of the Florida Properties.

[40] Seehra and Matharoo also either directly or indirectly hold Class C units in the Trust. Notably, Class C units are expected to continue to maintain their interest in the Partnership after the Trust is wound up.

[41] Accordingly, Seehra and Matharoo have a vested financial interest in the continuation of the Partnership after the winding-up of the Trust, free and clear of pre-existing liabilities. This outcome is not necessarily aligned in all respects with the interests of other stakeholders (including the plaintiffs).

[42] Seehra and Matharoo also have a vested interest in any position that the Trust may ultimately take in the context of its winding-up and termination regarding the recognition and satisfaction of the debt owing to the plaintiffs represented by the disputed September Promissory Notes that Seehra and Matharoo signed that purport to bind the Trust and all of the other DMCC Group entities. If those notes are determined to be valid and enforceable, Seehra and Matharoo also have personal exposure themselves. For that matter, Seehra and Matharoo have personal exposure not only to the plaintiffs for their loans, but to other creditors as well.

[43] The plaintiffs are concerned that these vested interests will influence how Seehra and Matharoo wind-up the Trust and distribute its assets if they are permitted to remain in control of that process. Two examples of how these concerns have already manifested themselves are:

a. No proposals or plans have been presented for the potential sale of the Florida Properties, nor is there any evidence that this option has been explored at all, which is consistent with the vested interest that Seehra and Matharoo have in a refinancing, as opposed to sale, of the Florida Properties as a means of realizing the value of the Trust assets to be distributed to the unitholders. They do not deny this, and point to the fact that it is something that was contemplated by the OM. Yet, the only refinancing proposal that they have presented for approval to date was rejected by the plaintiffs and the court because it came at a disproportionate cost to the value of the loan that was being refinanced, among other reasons. b. Until now, Seehra and Matharoo have not caused the Trust to disclose its potential liability under the disputed September Promissory Notes on its financial statements nor has this potential liability been recognized in any financial disclosure. No plan has been presented for determining this liability and the entities that may be responsible for it, or how it will be prioritized and/or addressed among the various entities that may be responsible for it, and which entities or persons will be responsible if the principal debtors (also controlled by Seehra and Matharoo) are unable to pay their debts. All of this could have significant impacts on the flow of funds and eventual distributions to unitholders of the Fund, and could also present personal exposure and liability for Seehra and Matharoo.

The Appointment of a Receiver

The Test and Analytical Framework

[44] On this motion, the plaintiffs move for the appointment of a receiver over the defendant corporations, the Trust, the Partnership and related entities (the entire DMCC Group) to sell the Florida Properties and wind-up the Trust. They contend that this is required to ensure that the Trust is wound up in a transparent and fair manner to all stakeholders.

[45] The parties differ on the appropriate test to be applied in the court’s determination of whether to appoint a receiver.

[46] The defendants advocate for an injunction standard to be applied. They rely on an interpretation of earlier cases that applied this higher standard in cases that the defendants say involved a request for the appointment of a receiver by unsecured creditors. They contend that the plaintiffs’ claims against the Trust, and other DMCC Group defendants, would be as unsecured creditors, at their best and that the plaintiffs must establish that there is a serious issue to be tried, irreparable harm if the receiver is not appointed, and that the balance of convenience favours the appointment.

[47] The plaintiffs say the court must undertake a contextual analysis to determine whether it is “just and convenient” to appoint a receiver.

[48] The plaintiffs’ position is that the “just and convenient” test should be applied, as it was recently in Canadian Equipment Finance and Leasing Inc. v. The Hypoint Company Limited, 2022 ONSC 6186. That case involved the consideration of whether to appoint a receiver in circumstances where the creditor was not fully secured (at paras. 27-29). The lack of security over the totality of the assets that were to be subject to the receivership meant that there was no as-of-right appointment of a receiver under the security. Nonetheless, a receiver was appointed under s. 101 of the CJA because the court considered it just and convenient. The existence of security that provides for the appointment of a receiver is only one among many factors to be considered in the analysis:

[22] The test for appointing a receiver, whether under the BIA or the CJA, is whether it is just and convenient to do so. The overarching objective is to enhance and facilitate the preservation and realization of a debtor’s assets, for the benefit of all creditors.

[23] In making a determination about whether it is, in the circumstances of a particular case, just and convenient to appoint a receiver, the Court must have regard to all of the circumstances, but in particular the nature of the property and the rights and interests of all parties in relation thereto. These include the rights of the secured creditor pursuant to its security. (See Bank of Nova Scotia v. Freure Village on the Clair Creek).

[24] Where the rights of the secured creditor include, pursuant to the terms of its security, the right to seek the appointment of a receiver, the burden on the applicant is lessened: while the appointment of a receiver is generally an extraordinary equitable remedy, the courts do not so regard the nature of the remedy where the relevant security permits the appointment and as a result, the applicant is merely seeking to enforce a term of an agreement already made by both parties. (See Elleway Acquisitions Ltd. v. Cruise Professionals Ltd., 2013 ONSC 7101 at para. 27).

[49] The plaintiffs reconcile the different tests based on whether the request is for an interim or interlocutory appointment or final appointment of a receiver. They suggest that it is only in the former case that the higher injunction standard must be met. This is consistent with the reasoning in Anderson v. Hunking, 2010 ONSC 4008, at para. 15 (e):

(e) [T]he test for the appointment of an interlocutory receiver is comparable to the test for interlocutory injunctive relief, as set out in RJR-MacDonald Inc. v. Canada (Attorney General), [1994] 1 S.C.R. 311 at paras. 47-48, 62-64;

(i) a preliminary assessment must be made of the merits of the case to ensure that there is a serious issue to be tried;

(ii) it must be determined that the moving party would suffer “irreparable harm” if the motion is refused, and “irreparable” refers to the nature of the harm suffered rather than its magnitude – evidence of irreparable harm must be clear and not speculative: Syntex Inc. v. Novopharm Ltd. (1991), 36 C.P.R. (3d) 129 (F.C.A.);

(iii) an assessment must be made to determine which of the parties would suffer greater harm from the granting or refusal of the remedy pending a decision on the merits – that is, the “balance of convenience”: See 1754765 Ontario Inc. v. 2069380 Ontario Inc. (2008), 49 C.B.R. (5th) 214 (Ont. S.C.), at paras. 7, 11;

[Citations edited.]

[50] The defendants contention that the higher “injunction” standard necessarily applies to unsecured creditors glosses over the importance of the express distinction that is made in Anderson (at paras. 15-17) between interlocutory and final appointments and the general context of other cases being discussed in Bank of Montreal v. Carnival National Leasing Ltd., 2011 ONSC 1007 (referred to in Hypoint) that also involved the interim appointment of a receiver pending a trial (at paras. 24-28). In my view, when considering whether the injunction test must be strictly applied when determining whether to appoint a receiver, the appropriate distinction to draw is, as the defendants contend, between an interlocutory as opposed to final appointment.

[51] Acknowledging that there is a distinction between the test for an interlocutory as opposed to final receiver, the plaintiffs contend that, while this is an interlocutory motion to appoint a receiver, the purpose of the appointment is to complete the winding-up of the Trust, and as such it is, in effect, a final appointment and should be analyzed as such.

[52] This distinction is consistent with how Conway J. viewed the situation in her October 31, 2022 endorsement when she stated: “[i]t must be viewed in the context of the present status of the Trust, which is not operating and is in the course of being wound-up.”

[53] I have determined that the strict injunction standard does not have to be met for the appointment of a receiver in this case. The landscape changed when the Wind-Up Notice was issued after this action had already been commenced. That led to the request for the appointment of a receiver. What the plaintiffs are seeking on this motion is a final order for the appointment of a receiver to oversee and administer the winding-up of the Trust that the defendants have initiated. There will be no need for a receiver once the winding-up of the Trust has been completed; the purpose of the appointment of the receiver in this case is to carry out a particular function that will be spent once that has taken place.

[54] Unlike other cases involving the interim appointment of a receiver, the purpose of the requested appointment in this case is not to collect and preserve assets pending some further determination, it is to carry out a function that would otherwise be carried out by some of the defendants. That the request for this appointment is being made in the context of a broader proceeding that may continue after, and independent, of the appointment of the receiver, does not change the essential purpose of the receivership. Accordingly, the issue that must be determined on this motion is whether it is just and convenient to appoint a receiver and, if so, over which defendants should the appointment be made.

[55] That does not mean that the merits of the plaintiffs’ claims are completely irrelevant. The existence of the dispute and that there are credible arguments on both sides of the dispute is itself a relevant consideration, as is the balance of convenience. These are incorporated into the holistic approach and contextual analysis and can be seen among the many factors that are considered in determining whether it is just and convenient to appoint a receiver. Conversely, the necessity of establishing irreparable harm is often not required. See Frank Bennett, Bennett on Receivership, 3rd ed. (Toronto: Thomson Reuters Canada, 2011), at pp. 155-159.

[56] This is consistent with the approach taken in Hypoint (at para. 25). After reviewing a list of factors that have historically been considered in the determination of whether to appoint a receiver, including whether irreparable harm might be caused if no order is made. The court noted:

[26] It is not essential that the moving party establish, prior to the appointment of a receiver, that it will suffer irreparable harm or that the situation is urgent. However, where the evidence respecting the conduct of the debtor suggests that a creditor’s attempts to privately enforce its security will be delayed or otherwise fail, a court-appointed receiver may be warranted. [See Bank of Montreal v. Carnival National Leasing Ltd., 2011 ONSC 1007 at paras. 28-29].

[57] What this contextual and holistic approach means, practically speaking, is that the plaintiffs do not need to establish a serious issue to be tried on the merits of their claims under the disputed September Promissory Notes or their oppression claims and/or that they will suffer irreparable harm. Rather, their onus is to demonstrate that it is just and convenient for a receiver to be appointed over the winding-up process.

The Plaintiffs’ Capacity to Seek the Appointment of a Receiver

[58] The first consideration is the plaintiffs’ standing to make this request. There is no question that the plaintiffs (or some of them) are creditors of at least two of the corporate defendants to which they advanced funds. There is a dispute about whether they are creditors of the Trust, the Partnership or the 17 Delaware LLCs that own the Florida Properties under the disputed September Promissory Notes.

[59] Much of the written and oral submissions of the parties were devoted to the dispute over the validity and enforceability of the September Promissory Notes upon which the plaintiffs’ claims for recovery of their debt from the DMCC Entities are predicated. This will eventually have to be determined if the plaintiffs intend to look to the Fund Defendants, and the Trust in particular, to satisfy their outstanding loans. However, that dispute does not need to be resolved for this motion.

[60] There is no question that the plaintiffs (or some of them) are investors in the Trust and, therefore, indirectly, in the Partnership and the 17 Delaware LLCs. There is general authority that was invoked in Kady Properties v. Centennial Hotels Ltd. (1995), 36 C.B.R. (3d) 241 (Ont. Gen. Div.) for the appointment of a receiver at the behest of investors over a general partner responsible for the management of a partnership in which they were invested.

[61] In Kady, at paras. 16-19, citing and relying upon an earlier decision of this court in Katz v. Katz (1976), 22 C.B.R. (N.S.) 198 (Ont. S.C.), at p. 199, a receiver was appointed under s. 101 of the CJA based on concerns that had been raised regarding:

[A] serious failure on the part of the defendants to account, and in view of the fact that they have de facto control of the company, which has a cash flow, I think that there is a reasonable danger threatening the assets of this company and that the interests of justice require that interim control of the company be removed from the defendants.

[62] The result was that a receiver was appointed over the assets and undertakings of the general partner, “who will be required to make the decisions on behalf of the limited partnership in an unbiased and even-handed manner and to deal with the manager of the hotel operation in accordance with the management agreement.”

[63] A principled analysis of the plaintiffs’ claims leads me to the following two capacities in which they have asserted claims upon which they can seek the appointment of a receiver to oversee the orderly winding-up of the Trust and the distribution of its assets comprised of its interest in the Florida Properties, net of established liabilities and other recognized stakeholder interests in the Trust assets:

a. In their capacity as investors in the Trust/Fund by analogy under the Kady analysis; and/or b. In their capacity as unsecured creditors of DMCC Americas (Canada) that, in turn, owns 100 percent of DMCC Americas (US), the property manager that also owns 51 percent of the Partnership that owns the 17 Delaware LLCs that own the Florida Properties.

Application of the Just and Convenient Test

[64] In assessing whether it is just and convenient to appoint a receiver, the question is “whether it is more in the interests of all concerned to have the receiver appointed by the Court or not”: see Freure Village, at para.12.

[65] There is a lengthy list of factors that the court has considered in deciding whether it is just and convenient to appoint a receiver in a given case. See Bennett on Receivership (referred to above). Keeping in mind that that the appointment of a receiver is extraordinary relief which should be granted cautiously and sparingly, some factors that are relevant to this case include:

a. the nature of the property; b. the rights and interests of all parties in relation to the property; c. the conduct of the parties; d. the length of time that a receiver may be in place and ways in which the role can be facilitated; e. the balance of convenience to the parties; f. the effect of the order on the parties; and g. the cost of the receivership to the parties.

[66] Having regard to the identified factors and the other more general considerations noted above, I find that the appointment of a receiver over the Administrator and DMCC Americas Inc. (Canada) is just and convenient in this case because:

a. the Fund has public investors, beyond the immediate parties to this proceeding, whose ultimate source of recoveries are the Florida Properties; b. the Trust Declaration requires (in Art. 14.5) the Administrator (and the Trustee) to proceed to wind-up the affairs of the Trust as soon as may be reasonably practicable after the Wind-Up Notice was delivered; c. the Wind-Up Notice was sent out almost a year ago and the winding-up process, while underway, has not been meaningfully advanced by the Administrator under the direction and control of Seehra and Matharoo and the Fund Defendants have not substantiated their assertion that the plaintiffs are to blame for this delay, as discussed earlier in this endorsement; d. the inevitability of the winding-up of the Fund (having already been triggered), and the manifestation of the conflicts of interest that Seehra and Matharoo have because of their vested interests (in the refinancing rather than sale of the Florida Properties and in the timing and manner in which the liability and priorities arising from the disputed September Promissory Notes are determined) if they are left in charge, is a unique and significant consideration militating in favour of the appointment of a receiver in this case; e. a court supervised process will ensure that the interests of all creditors and other stakeholders of the Trust are considered with a view to achieving the maximum recoveries for them following an orderly refinancing or sale of the Trust assets and determination and satisfaction of established liabilities; f. a court supervised receivership process will provide the best forum to deal with any priority issues as between the plaintiffs and other stakeholders; g. the appointment would be for the duration of the winding-up of the Trust and the distribution of its assets which is finite and purposive; h. the receiver’s efforts can be facilitated by terms of the appointment order requiring the co-operation of Seehra and Matharoo and by including in the receivership, for the time being, certain identified essential participants: the Administrator of the Trust, the General Partner of the Partnership and DMCC Americas (Canada) that directly controls the manager of the Florida Properties, DMCC Americas (US) that in turn indirectly controls the Partnership; i. while the appointment of an outside receiver will likely add some cost to the winding-up process (ultimately to be borne by the unitholders), more than 50 percent of the investors (by value) have indicated they support the appointment of an outside receiver; and j. The proposed receiver has consented to its court appointment.

[67] The involvement of public investors, including the plaintiffs, in the Fund that is being wound-up is a factor that weighs heavily on the “justice” of the appointment of a receiver. Put another way, it is not just, and the stakeholders’ interests are not being served by, the continuation of the status quo of having Seehra and Matharoo in control the winding-up process, having regard to their limited efforts to date in respect of either a refinancing or sale of the Florida Properties.

[68] Earlier in this endorsement, this was attributed, in part, to the vested (conflicting) interests that Seehra and Matharoo have that appear to have already manifested in their conduct to date and could further impact the process if they are permitted to remain in control of it. While concerns about future conduct may not be the basis for an oppression remedy (see APCA v. Air Canada Ace Aviation Holdings Inc. (2007), 26 B.L.R. (4th) 124 (Ont. S.C.), at para. 63, aff’d 2008 ONCA 531, 44 C.B.R. (5th) 169) I was not presented with any authority to the effect that such concerns cannot be the basis for the appointment of a receiver under s. 101 of the CJA, if the court determines that it is just and equitable to do so.

[69] These concerns are not fanciful or entirely speculative. They are based on historic and existing facts that call into question the ability of the Administrator, under the stewardship of Seehra and Matharoo, to complete the winding-up of the Trust in a manner that is transparent, just and fair to all investors and stakeholders given how many different, and some conflicting, interests they have in the overall project and their desire for it to continue after the Trust is wound-up, an outcome that may not be in the best interests of the other stakeholders.

[70] While some of the conflicting positions are inherent in the Fund structure and were part of the disclosure in the OM, the added layer of the potential liability of the Trust for the repayment of loans from plaintiffs under the disputed September Promissory Notes, was not anticipated. Nor was the current level of borrowing and defaults under secured loans anticipated.

[71] The potential intrusiveness of a receiver is tempered here given that the Trust is in a wind-up phase so is not intended to be an ongoing business. The receiver’s mandate will start out as only involving key players (to manage and control the Administrator and the General Partner and property manager) and will concentrate on the wind-up that has already been triggered and that will be completed after a finite period. The intention is that the receiver will be able to control and steward the winding-up process through these entities.

[72] In the balance of convenience, the Fund Defendants argue that: (a) the cost of the receivership (which will ultimately be borne by the investors in the Trust) is not warranted; (b) the appointment of a receiver will further imperil the Trust assets (specifically, the Florida Properties) and cause secured creditors (who have priority over any unsecured claims of the plaintiffs) to pursue their enforcement remedies; and (c) the plaintiffs are using the appointment of a receiver as a means of seeking execution before judgment on their unsecured loans and the disputed September Promissory Notes to obtain payment of those in priority to other investors in the Fund.

[73] I find that these concerns are outweighed or neutralized by the following existing circumstances and the terms of the envisioned receivership:

a. While it is reasonable to expect that the appointment of a receiver will come with additional cost to the Fund (and therefore its investors), the plaintiffs have demonstrated that they have the support of more than 50 percent of the investors (based on their economic interests). [3] b. Further, I would expect that the fees otherwise payable to the Administrator under the Trust Declaration could and should be paid towards (or perhaps cover entirely) the cost of the appointed receiver that will step into the shoes of the Administrator, thereby mitigating the cost concern. c. Some secured creditors have already started enforcement actions and, even without the appointment of a receiver, they are, or soon will be, in a position to pursue their enforcement remedies. With no alternative refinancing plan in place, that scenario could unfold in any event. The receiver, with the co-operation that the court expects from Seehra and Matharoo, should be in a position to work with the secured creditors to try to maximize value for all interested parties if enforcement steps are pursued. d. While the defendants assert that there will be “drastic consequences” for the business and viability of the Fund if a receiver is appointed, they only speak in generalities. Many of these concerns should be alleviated by the fact that the Wind-up Notice was sent out almost a year ago and there should be no expectation on anyone’s part (whether it be the secured creditors, tenants or others who deal with the Partnership and the 17 Delaware LLCs) that the Fund is continuing. If the Partnership is to continue there will have to be a refinancing, irrespective of whether a receiver is appointed or not; again, not a surprising revelation in light of the Wind-Up Notice. e. The Administrator remains in the same position with or without the receiver. It must liquidate the Fund’s assets through a refinancing or sale and pay off all established creditor claims before making the final distribution to investors through the redemption of their units. f. While Seehra testified that a receivership of the entire DMCC Group will have an adverse impact on the marketability of the Trust’s projects and could imperil its ability to attract investment, this is not (at least yet) a receivership of the whole DMCC Group. If Seehra and Matharoo co-operate with the receiver (acting as the Administrator of the Trust for purposes of the wind-up), as the court expects them to do, they should be able to minimize the concerns about reputational and other impacts. The continued, but controlled, involvement of Seehra and Matharoo in this process should also alleviate their concerns about the receiver’s lack of familiarity with the relevant assets and markets, provided they offer their support and information. g. A court appointed receiver is not being put in place to improve the plaintiffs’ position as creditors of the Fund. The receiver, acting as the Administrator of the Trust, will have to evaluate those claims independently and may, or may not, determine it to be a liability of the Fund that is to be paid in priority to distributions to investors upon the winding-up of the Trust. The receiver may need to seek further directions and assistance from the court in this regard. These claims will have to be addressed during the winding-up of the Trust whether or not a receiver is appointed. h. The nature of the challenges to the validity and enforceability of the disputed September Promissory Notes (that Seehra and Matharoo signed and initialed multiple times) if anything, supports the appointment of an independent court officer to steward the Administrator through the determination of these competing claims.

[74] Notably, from the court’s perspective, the Trustee does not appear to be a party to this motion; nor did it participate or indicate any position in connection with this motion. While the defendants suggest that the oversight of the Trustee in the winding-up process, if permitted to proceed under the direction and control of Seehra and Matharoo, is something that should provide the court with some comfort, precisely how that would work is not clear. Nor is it clear or obvious that the Trustee would involve itself in the mechanics of the refinancing or sale process that will precede the final termination of the Trust and the distribution to investors.

[75] The Fund need not be insolvent for a receiver to be appointed and I make no finding of insolvency (or solvency) for purposes of this motion. While the court might be more reluctant to appoint a receiver in the absence of a finding of insolvency (see 1324789 Ontario Inc. v. Marshall, 2019 ONSC 517), the other justifications for this appointment previously identified in this endorsement are sufficient to warrant the appointment in this case.

[76] Having considered the relevant factors holistically, I find that it is just and convenient for the wind-up of the Trust to be carried out under the supervision of the court to ensure transparency, compliance with the Trust Declaration and fairness to all stakeholders.

[77] I consider it to be just and convenient, having regard to the interests of all investors, to appoint an independent receiver to administer the winding-up of the Trust. That should be achievable by appointing a receiver over the Administrator, DMCC Management 1 Inc., (Ontario), and allowing that receiver to utilize the Administrator’s powers under the Trust Declaration to address issues that may arise, supported and facilitated by the receiver’s powers under the appointment order.

[78] This is consistent with the powers that the plaintiffs and supporting investors would have to replace the Administrator under the Trust Declaration but provides the added court oversight and the ability to come back and ask for expanded powers and appointment over other entities if shown to be necessary to achieve the intended objective of the fair and equitable wind-up of the Trust and the realization of maximum value for the Fund investors. For the time being, I do not consider the broader scope of the appointment of a receiver over the entire DMCC Group to be warranted.

[79] I have also determined it to be just and convenient for the receiver’s appointment to extend to the General Partner, DMCC Management 1, Inc. (US), and DMCC Americas (Canada) which is the parent company of the property manager and holder of the controlling interest in the Partnership (DMCC Americas (US)). Those entities are expected to be essential to the winding-up process.

[80] In addition, the plaintiffs are acknowledged unsecured creditors of DMCC Americas (Canada) through which some distributions from the Partnership may flow. Given the potential for conflicting claims and priorities that may need to be determined as a result of the disputed September Promissory Notes, the receiver should be in place to manage and control that flow of funds to ensure that the claims and priorities of all stakeholders (including creditors and investors) are dealt with in a transparent, principled and fair manner.

[81] The expectation is that the appointment of a receiver over these three companies should enable the receiver to carry out its intended mandate of the winding-up of the Trust. It will also give the receiver control over the distribution of any proceeds of realization that may come to DMCC Americas (Canada), having regard to the broader objectives of this receivership.

[82] To be clear, the purpose of the appointment of a receiver is to implement and oversee the orderly winding-up of the Trust and to enhance and facilitate the preservation and realization of the Trust’s assets for the benefit of all stakeholders. It is not to preserve the assets of the Trust for the plaintiffs to be paid under the disputed September 2019 Promissory Notes. That may be one outcome of the receivership, if determined to be appropriate, but it is not the intended purpose or objective of this appointment.

The Breadth of the Receivership

[83] One objection raised against the plaintiffs’ request for the appointment of a receiver over all of the Fund and Non-Fund Defendants is that it was overly broad and involved an Alberta Trust, a US Partnership and multiple corporations with no presence in Ontario. The plaintiffs counter that Ontario is the “seat” of this Fund and the entities involved in the holding of its assets and its management, as well as the other members of the DMCC Group. It is run by the DMCC Group and specifically the two individual defendants who reside and work from Richmond Hill, Ontario, Seehra and Matharoo.

[84] Without attaching this label, the plaintiffs’ written and oral submissions are essentially seeking substantive consolidation of the defendants as a group of debtor companies and the appointment of a receiver over all of them to administer the assets of the business as a whole. They do so on the basis of their allegation that the defendants have been operating as a single entity under the direction and control of Seehra and Matharoo. Even if this is theoretically an available basis for the appointment of a receiver over a group of companies (a point which I am not deciding right now), I am not inclined to make such a broad sweeping determination at this time.

[85] Although the court can make an order over foreign entities if they are owned and controlled by Canadian shareholders, as is the case here, the appointment of a receiver is an extraordinary remedy. The terms and scope of the appointment of a receiver should be restricted to what is considered necessary in the circumstances. Having regard to the identified concerns about the winding-up process, the need for oversight, and the intended purpose and potential effects of the appointment of a receiver, the initial more limited scope appointment over the Administrator, the General Partner and DMCC Americas (Canada) is what I consider to be just and convenient and proportionate at this time.

Broadening the Appointment under the Oppression Remedy

[86] The plaintiffs also sought the appointment of a receiver in their capacity as investors under the oppression remedy in s. 248 of the Business Corporations Act. While it is not necessary to make the appointment under this authority, having regard to the decision already made to make the appointment under s. 101 of the CJA, since some time was spent in the parties’ written and oral submissions on this point, I will address it briefly.

[87] The oppression remedy under the OBCA is only available in respect of OBCA companies. There is no evidence that the plaintiffs are investors or shareholders directly in any of the OBCA defendant companies.

[88] Creditors have standing to make an oppression remedy claim. The plaintiffs have asserted claims as creditors of some of the OBCA companies in the DMCC Group under the disputed September Promissory Note. DMCC Americas Inc. (Canada) is an OBCA company to which they loaned money and they are unquestionably a creditor of that company. However, their concerns in that capacity (qua creditor) are future-oriented. As noted earlier in this endorsement, those types of concerns are not typically a basis for an oppression remedy (see APCA). Further, the oppression remedy is intended to protect reasonable expectations. The plaintiffs’ expectations as creditors would be different than their expectations as investors. There is always a lingering concern when creditors seek status as a complainant to seek an oppression remedy that debt actions not be routinely turned into oppression actions. See Cohen v. Cambridge Mercantile Corp. (2007), 33 B.L.R. (4th) 248, at paras. 36 and 37, citing Royal Trust Corp. of Canada v. Hordo (1992), 10 B.L.R. 86 (Ont.Gen.Div.), at p. 92.

[89] The focus of this motion for the appointment of a receiver is in respect of the reasonable expectations for an orderly and value maximizing winding-up of the Trust. Those are more closely aligned with the interests and expectations of the investors in the Fund. Neither the Alberta Trust or the Florida Partnership that comprise the Fund are OBCA companies.

[90] I am not satisfied, based on the record for this motion, that there is a sufficient basis for appointing a receiver over any of the defendant companies under the OBCA oppression remedy. Further, granting an order under the oppression remedy for the appointment of a receiver would have required at least a preliminary a finding of oppression (failure to meet reasonable expectations). This would have been a more challenging burden for the plaintiffs to meet at this stage. In any event, they do not need to do so given my decision to appoint a receiver on other grounds.

Appointment Order

[91] The plaintiffs shall prepare a revised form of order appointing a receiver over the three companies as indicated. The order shall include all the usual powers and all the usual requirements for co-operation, including specifically from Seehra and Matharoo and the Fund Defendants.

[92] The authority of the receiver, in addition to the typical wording, shall also include the authority of the Administrator under the Trust Declaration. The receiver shall also step into the shoes of the General Partner and DMCC Americas (Canada) and have the permitted authority that those entities have in respect of the Partnership.

[93] The receiver’s bills will be subject to the usual scrutiny of the court, based on the normal hourly rates and time spent. The fees that the Administrator (DMCC Management 1, Inc. (Canada) and/or the General Partner (DMCC Management 1, Inc. (US)) and/or the property manager (DMCC Americas (US)) are entitled to in the normal course may be used to pay the receiver’s accounts. If other sources of interim funding for the receiver’s costs are required, that may be addressed at a future court attendance.

[94] The terms of the appointment order may include a stay of proceedings and prohibition against the exercise of rights and remedies and the other usual protections vis-à-vis the companies over which the receiver is appointed. This will not include a stay or prohibition at this time in relation to the Partnership itself or the 17 Delaware LLCs that own the Florida Properties. Even if a stay could be granted in relation to the indirect assets owned by the Trust and now under the administration of the receiver, I do not consider that it would have been appropriate to grant a stay that could impact the enforcement remedies of secured lenders against the Florida Properties without notice to them.

[95] The plaintiffs’ request for the appointment of a receiver over the other Fund Defendants (and the other DMCC Corporate Defendants for which the appointment of a receiver was sought) is adjourned. The receiver may seek further directions from the court, including the expansion of the receivership over additional defendants and the expansion of its powers if it determines that to be necessary and appropriate for it to carry out the primary objective of this receivership: the orderly wind-up of the Trust. The appointment order shall include a come-back provision to this effect, after the receiver has had a reasonable opportunity to consider the potential options and propose a plan (including any enhanced powers and authority the receiver considers necessary for its implementation) after having identified any foreseeable obstacles or impediments.

[96] The receiver shall seek court approval of any proposed dealings with the Trust property or in advance of any unit repurchases or redemptions. The appointment of the receiver over the three companies in question is intended to put under the control of the receiver, through its control of the Trust and the General Partner and property manager, all dealings with the Florida Properties or other Trust assets. If that has not been achieved through this appointment, this should be brought to the court’s attention and, in the meantime, the restrictions imposed under the Interim Order of Gilmore J. (prohibiting any refinancing or unit redemptions or purchases) shall remain in place vis a vis the other defendants.

[97] The parties shall attempt to work out the details of the appointment order based on the guidance in this endorsement. That said, they may schedule a case conference before me through the Commercial List Scheduling Office to settle the order if they are not able to agree on all of the terms. In such event, the plaintiffs’ proposed form of order with a blackline indicating the defendants proposed changes shall be provided in advance of that case conference.

Costs

[98] The parties have exchanged costs outlines as the court directed they do after their first appearance on February 24, 2023. They have reported to the court that the amounts of claimed costs are similar as between them. The parties asked for the opportunity to make submissions on costs once the outcome of the motion is released given the breadth of potential outcomes and anticipated submissions about the timing for the payment of any costs.

[99] The parties now have this endorsement; if they are unable to agree on the costs of this motion, they shall arrange through the Commercial List Scheduling Office to attend a case conference before me prior to the end of May 2023 to consider the matter of costs. They may file, in advance of that case conference (and upload onto CaseLines) their previously delivered cost outlines and an Aide Memoire (not to exceed three pages double spaced) containing a brief summary of their position on costs and any issues that the court may need to determine regarding the costs of this motion. The court may, in its discretion, permit further submissions or decide the matter of costs based on what is filed at or following that case conference.

Kimmel J. Date: April 19 2023

Footnotes

[1] There was some suggestion that the plaintiffs might only be seeking the appointment of a receiver over the DMCC Fund Defendants and DMCC Americas (US) and DMCC Americas (Canada) from the DMCC Corporate Defendants.

[2] Although not the subject of this action, there were earlier promissory notes signed by a smaller sub-set of the defendants in May of 2019 in the context of the execution of restated loan agreements. These are said to have been signed for insurance purposes. The plaintiffs demands and claims in this action are made under the September Promissory Notes, which they say replaced the earlier promissory notes.

[3] There was initially an objection from the defendants to the late filing of affidavits from two investors who support the appointment of a receiver, attaching further evidence of support that they have garnered from more than 50% of the investors in the Fund by value. For other reasons, the conclusion of the motion on the first return date was delayed and the court permitted the investor affidavits to be filed, which they eventually were, and the opportunity was afforded to the defendants to respond to and/or challenge these affidavits, which they chose not to do.