Court File Numbers

CV-20-00649907-00CL
CV-21-00655525-00CL
CV-19-00659278-00CL

Date

March 14, 2025

Court

Superior Court of Justice – Ontario (Commercial List)

Parties

Between:
Doug Middleton, Applicant

• and –
  Direct Broadcast Satellite Communications Corp., The Benefits Group Inc., and Mark Ber, Respondents

And Between:
JDM Group Ltd. and Jason Middleton, Applicants

• and –
  Direct Broadcast Satellite Communications Corp., Producers Planning Group Ltd., The Benefits Group Inc., Thornbridge Capital Inc., and Mark Ber, Respondents

And Between:
Direct Broadcasting Satellite Communications Corp., The Producers Group Ltd., and Mark Ber, Applicants

• and –
  JDM Group Ltd., Producers Planning Group Inc., The Benefits Group Inc., Thornbridge Capital Group Inc., Doug Middleton, and Jason Middleton, Respondents

Before

Barbara Kimmel

Appearances

• Harvey Chaiton & Laura Cullerton, for the Sales Officer
• Howard Borlack & Maxwell Gill, for Jason Middleton, Doug Middleton, and JDM Group Ltd.
• Kevin MacDonald, Brendan MacDonald & Jamie Sanderson, for Mark Ber, Direct Broadcast Communications Satellite Corp., and the Producers Group

Heard

January 21, 2025

Endorsement

Introduction

B. Riley Farber Advisory Inc. ("B. Riley") was appointed Sales Officer ("Sales Officer") of Producers Planning Group Ltd. ("PPG") and The Benefits Group Inc. ("TBG", together with PPG, the "Companies") pursuant to the Order of Justice Cavanagh made December 30, 2022, with effect as of March 28, 2023 (the "Appointment Order").

The Appointment Order was made following a hearing of competing oppression remedy applications. The court was not satisfied that oppression was established but ordered the wind-up and the sale of the Companies by the Sales Officer, on the basis that the shareholders were hopelessly deadlocked and unable to continue to carry on business operations with each other. The two parties most at odds in the litigation are Jason Middleton and Mark Ber. Doug Middleton is Jason’s cousin.

The Appointment Order authorized and directed the Sales Officer to prepare a plan for the sale of the shares and/or business and assets of the Companies for approval by the Court (the "Sale Process"). The Companies had carried on business as licensed insurance brokerages selling life insurance and employee group benefits (the “Business”). The Appointment Order prohibits the shareholders previously involved in the Business from directly or indirectly bidding in the Sale Process.

Since the Appointment Order was made, there have been numerous motions and attendances at case conferences for directions from the court regarding the fulfilment of the Sales Officer’s mandate under the Appointment Order. Much of that has been due to the continued animosity between the shareholders. The Sales Officer has been met with considerable resistance in carrying out its mandate. Particular resistance has come from Mark Ber, his holding company Direct Broadcast Communications Satellite Corp. and his operating company the Producers Group (collectively, the “DBS Parties”, also sometimes referred to as “Mark”). This has been documented in earlier endorsements.

There were originally three motions scheduled to be heard on January 21, 2025:

a. A motion by the Sales Officer for approval of: i. the Sale Process that it has proposed pursuant to paragraph 6(b) of the Appointment Order for the sale of the shares and/or business and assets of the Companies for (the "Sale Process Order") described in the Fourth Report of the Sales Officer and Supplements thereto (collectively, the "Fourth Report"); and ii. the marketing and sale of the Remaining Policies, the Transferred Policies (both defined below), any other policies transferred since January 1, 2021 to Mark Ber or his affiliates, all commissions payable thereunder, and all books and records related thereto including client files in any format (collectively, the "Assets") and for additional relief (collectively, the “Ancillary Relief”).

The proposed Sale Process Order is not opposed by Jason and Doug Middleton and the JDM Group Ltd. (the “JDM Parties”). Certain aspects of it are opposed by the DBS Parties.

b. A motion by the JDM Parties for the expansion of the Sales Officer's powers to those of a receiver and manager (the “Receivership Motion”) over the Companies (PPG and TBG) and also expanding it to include Mark's company, The Producers Group Ltd. ("PG"). The Sales Officer is prepared to accept those enhanced powers if such relief is granted. The DBS Parties oppose all aspects of this Receivership Motion.

c. A motion by the DBS Parties seeking payment of their costs of administering and servicing certain Remaining Policies, the Transferred Policies, and any other policies that have been transferred since January 1, 2021 to Mark or his company PG (the “Administrative Expenses Motion”). This motion was adjourned by the court’s endorsement of December 18, 2024 due to the failure of the DBS Parties to adhere to the briefing schedule that made it impractical for that motion to be ready to be heard on January 21, 2025. That motion was rescheduled for a half day on March 25, 2025. [1]

Summary of Outcome

For the reasons that follow, the Sale Process is approved and the Sale Process Order is granted, including certain of the Ancillary Relief (detailed later in this endorsement). The Receivership Motion is dismissed.

The Sales Officer’s Motion: Sale Process Order

The concept of the proposed Sale Process is approved and consented to by the parties. Mark has raised certain points of objection. Any points of objection initially raised by the JDM Parties were addressed or withdrawn by the time of the January 21, 2025 hearing.

At the outset I observe that the parties presented at the January 21, 2025 hearing on the basis that there were only a few points of disagreement between them regarding the terms of the Sale Process Order. Despite that, there was a lot to unpack and deal with in respect of each issue that was raised, including points that had not been initially raised in the factums filed beforehand.

The Sales Process: Terms and Rationale

The Appointment Order granted the Sales Officer full and complete access to the Companies’ Property (as defined therein) including books, records, data in whatever format and other financial documents wherever located. The computers, operating assets, books and records of PPG have remained in the possession and/or control of Mark since the time of the Appointment order. This has been the source of many of the challenges that the Sales Officer has faced in its efforts to carry out its mandate over the last two years since the terms of the Appointment Order were settled.

Mark has persistently failed to comply with the Sales Officer's numerous requests for documents, information and remittance of commission funds collected relating to the insurance policies and other assets that are among the Property that the Sales Officer was appointed to sell. This has required the Sales Officer to bring motions to compel Mark to comply with the obligations of the DBS Parties and third parties (such as PG) under the Appointment Order. Certain aspects of the proposed Sale Process Order are informed by this history and by concerns about Mark’s past and continuing conduct.

For example, the Appointment Order contemplated that there might be a sale of the shares of the Companies. However, in November 2023, Mark unilaterally advised the insurance carriers of the policies previously under PPG’s administration that PPG was no longer licensed to carry on business as an insurance brokerage because he had transferred his advisor license and resumed operating through PG (without providing any advance notice of this to the Sales Officer or to the JDM Parties). That led to a series of attendances and directions from the court concerning policies that had been transferred to PG that the court determined were part of the Property of the Companies that the Sales Officer had been appointed to sell (the “Transferred Policies”).

Advice and directions were also sought with respect to some other policies that remained with the Companies (the “Remaining Policies”) that then needed to be administered by a licensed advisor since the Companies no longer had one after Mark transferred his license to PG. There were only a small number of Remaining Policies which were divided between Jason and Mark to administer in the interim, with obligations to report and remit commissions to the Sales Officer. Those obligations were later expanded to the Transferred Policies as well.

The loss of a licensed insurance advisor means the Companies no longer have an active Business. As a practical matter, the only Assets that are left for the Sales Officer to sell are the insurance policies currently being managed by Mark and Jason under their respective licenses. Accordingly, the proposed Sale Process does not contemplate a share sale or the sale of any other of the Companies' Property.

The proposed Sale Process is described in detail in the Fourth Report of the Sales Officer. The Sale Process will commence immediately upon court approval and will be marketed to strategic purchasers on an “as is where is” basis.

The Sales Officer proposes to establish and maintain a data room that contains information concerning the Assets, the business of the Companies when they were able to carry on business and other relevant documents made available to or obtained by the Sales Officer. The Sales Officer intends to include the policies (including the Transferred Policies and the Remaining Policies, collectively the “Policies”) in the data room but will redact the names and addresses of the policyholders to maintain confidentiality. The Sales Officer also intends to include the amount of monthly commissions currently being paid and to be paid by the carriers over the next 3-5 years in respect of all Policies.

There are clearly delineated “Participation Requirements” for any offer received as part of the Sale Process. The factors to be considered in respect of any offers received will include:

a. the purchase price and the net value provided by such offer;
b. the identity, circumstances and ability of the offeror to successfully complete the transaction, including the ability of the offeror to properly administer the Purchased Assets after successful completion;
c. the Assets included or excluded from the offer; and
d. the likelihood and timing of completing such transaction.

The weight to be attributed to any factor in the Sales Officer's evaluation will be in the discretion of the Sales Officer. The highest offer, or any offer, will not necessarily be accepted by the Sales Officer. If an offer is accepted and an Asset Purchase Agreement (“APA”) is signed, it will be subject to court approval.

Criteria for Approval of the Sale Process

The reasonableness and adequacy of any proposed sale process needs to be assessed in light of the principles set out at p. 6 of Royal Bank of Canada v. Soundair Corp., 4 OR (3d) 1 (C.A.), as those principles will ultimately be taken into account if and when the court is asked to approve a proposed sale. [2] This has led to the accepted practice at the sale process approval stage of the court assessing the following factors:

a. the fairness, transparency and integrity of the proposed process;
b. the commercial efficacy of the proposed process in light of the specific circumstances facing the court officer; and
c. whether the sale process will optimize the chances, in the particular circumstances of securing the best possible price for the assets up for sale.

See CCM Master Qualified Fund Ltd. v. blutip Power Technologies Ltd., 2012 ONSC 1750, para 6.

The Sales Officer recommends the Sale Process, taking into account these factors and principles as detailed in the Fourth Report.

I agree that what the Sales Officer has proposed, given the limitations under which it is operating, is transparent, commercially efficacious and has been designed to optimize the chances, in the particular circumstances that these Companies are in, of securing the best possible price for the Assets. The parties are generally in agreement that the proposed Sale Process is appropriate and should be approved; however, Mark continues to challenge certain terms of the Sale Process and ancillary relief that he contends introduce a potential unfairness and detract from its overall integrity.

Specific Terms Objected to by Mark

The Proposed Interim Broker/Administrator

Part of the Sale Process involves the interim appointment of a licensed insurance brokerage (“Interim Broker”) to administer the insurance policies to be sold under the Sale Process Order, pending their sale. The Sales Officer has proposed Kingsmere Financial Services Inc. ("Kingsmere") as the Interim Broker to administer the policies pending their sale at a cost of $7,000 per month. The economic terms of the proposed engagement of Kingsmere are not challenged or objected to.

The Sales Officer initially disclosed that Kingsmere was an affiliate, but later corrected this statement to say that it is not a corporate affiliate, as that term is generally understood. As part of a transaction involving the wealth management side of the Farber Group, that group became part of what now operates as B. Riley Farber Advisory Inc. (the entity that is the Sales Officer). The Farber Group held an outstanding (as of yet unexercised) option to acquire Kingsmere (the “Option”).

The terms of the proposed Sale Process Order would permit Kingsmere to make an offer to purchase the Assets. Mark initially objected to this on the basis that: "Kingsmere and the Sales Officer are in a conflict of interest and Kingsmere has access to inside information" due to the fact that Kingsmere is affiliated with, or has personnel in common with, the Sales Officer.

Mark asserts that Glen Nortje is both the managing director of the wealth management practice at B. Riley, and a co-founder of Kingsmere. The Sales Officer’s time records disclose that this individual was consulted about the Sale Process and, in particular, the type of data purchasers may need.

Mark says this gives rise to a potential or perception of a conflict, namely that Kingsmere might be favoured as a bidder and have an “inside track” in the bidding process (e.g. access to information about other offers, expressions of interest etc. that the Sales Officer is privy to) if it participates in the bidding process, because of its connections to the Sales Officer.

A Sales Officer, as an officer of the Court, must not only be impartial, disinterested and able to deal with the rights of all interested parties in a fair and even-handed manner, but ought also to appear to have those qualities: see Confederation Treasury Services Ltd., Re, para 16. Mark alleges that Kingsmere’s appointment as the interim broker would not only give rise to a potential conflict but also to an appearance of conflict, even if not an actual conflict.

The Sales Officer’s first response to this is that the Option has not been exercised (and according to the Sales Officer, likely will not be). Therefore, the Sales Officer does not have even an indirect financial interest in Kingsmere being the Successful Bidder, and it understands its duties of impartiality and fairness towards all prospective purchasers, including Kingsmere.

The Sales Officer maintains that there is no overlap in the senior personnel of the Sales Officer and Kingsmere. Stuart Mitchell is the senior managing director that is fulfilling the functions of the Sales Officer. Mr. Nortje was consulted in the same way that the Sales Officer would have consulted any prospective Interim Broker about the type of information and documents that prospective purchasers of those policies might want to have access to.

The Sales Officer acknowledges that it must be free of conflict and any appearance of conflict when evaluating bids received from Prospective Purchasers in the Sale Process. It points to the qualitative and objective criteria against which bids will be compared, analyzed and evaluated under the Sale Process, including the Participation Requirements. While there is an element of discretion, the Sales Officer is an officer of the court, and will be required to come to the court to justify any APA for which approval is sought with reference to those objective criteria. Any concerns about unfairness or bias towards Kingsmere if it is the Successful Bidder can be addressed at the time of the sale approval.

The second concern noted by Mark was that, as the Interim Broker administering the policies during the Sale Process, Kingsmere would have access to information not available to other prospective purchasers, and that could give it an unfair advantage in the bidding process. The Sale Process contemplates that Mark and Jason be ordered to immediately deliver possession of the Transferred Policies, the Remaining Policies and the customer files relating to the policyholders in whatever format they are maintained to the Sales Officer or if the Sales Officer so directs, to Kingsmere. This will mean Kingsmere will have all of the policy related information, not just what is in the data room.

This latter concern appears to have nothing to do with any connection between Kingsmere and the Sales Officer per se, and would apply to any interim broker appointed to administer the policies during the Sale Process. During the hearing Mark’s objection was expanded to be not only against the appointment of Kingsmere as the Interim Broker, but to the appointment of any interim broker that would be permitted to bid on the Assets.

Kingsmere is not prepared to administer the Policies unless it has the opportunity to purchase the Assets. This is not an unreasonable position. Other independent brokers, if asked to take on the role of interim administrator, could reasonably take the same position. It must also be noted that there is a limited market of insurance brokers to administer the insurance policies being sold during the Sale Process, and a high probability that any entity with the qualifications and requisite license to do so would be a prospective bidder. As such, restricting the proposed interim broker’s ability to participate in the bidding process will, as a practical matter, eliminate almost any qualified broker to take on this role.

Furthermore, no specific advantage to Kingsmere (or any other interim broker) from this role was identified by Mark. The only information that was identified that the Interim Broker might have that would not be made available to prospective bidders in the data room is the names of the policy holders that the Sales Officer proposes to redact for privacy reasons. No explanation has been provided about how this information would be useful to a prospective bidder or how it would give any advantage to Kingsmere to have it.

The Sales Officer points to other circumstances in which a court officer is required to consider bids that are presented from bidders who have disproportionate knowledge of and connections to the assets. For example, such would be the case in a stalking horse situation where a debtor/owner is also a potential buyer and is also actively involved in the sale process. That does not give rise to a disqualifying conflict or appearance of conflict at the sale process approval stage, nor should it in the circumstances of this case.

Appointing Kingsmere as the Interim Broker and allowing it to bid in the Sale Process is less than ideal because it will open up the Sale Process to greater scrutiny if Kingsmere is the successful bidder. However, this is not measured to a standard of perfection. None of the parties have presented an alternative to Kingsmere to act as Interim Broker.

Mark did not come to the hearing with a proposed alternative broker to Kingsmere, but offered to “discuss” alternatives with the Sales Officer. After a break during the hearing, Mark’s counsel returned and offered that Mark (through PG) would agree to take on that role. The Sales Officer and the JDB Parties do not agree to the appointment of Mark or PG as the interim administrative broker given his lack of co-operation and failure to comply with orders requiring him to provide documents and information that are essential to the fulfillment of the Sales Officer’s mandate.

I am not persuaded that if Kingsmere is appointed as the Interim Broker it will have any advantage that renders the proposed Sale Process unfair or that undermines its integrity. I am satisfied that the Sales Officer will be able to act in an impartial, fair and even-handed manner. I am further satisfied that there is no actual, potential or appearance of conflict in the appointment of Kingsmere as the Interim Broker or in the Interim Broker being permitted to be a bidder in the Sale Process. The Sales Officer will be expected to continue to act in accordance with its duties as an officer of the court: to evaluate the bids on the basis of the objective criteria that are set out in the Fourth Report and to provide a fulsome explanation for the eventual bid selected, whether it is Kingsmere or not.

Custody of the Policies During the Sale Process / Commission Reporting and Remittance

If the Sales Officer's proposed Sale Process is approved, the Sales Officer will immediately require Mark (and the JDM Parties) to deliver all Assets in his possession or control, including books and records, the insurance policies, all related policy information, commission data and client files, that will ultimately be needed to complete any transfer to a Successful Purchaser(s) (as defined in the Sale Process Order).

The Sales Officer seeks to proactively insist upon that hand over now to avoid uncertainty and risk of non-delivery that might negatively impact the sale value of any Assets of the Companies. The proposed ancillary terms of the Sale Process Order require both Mark and Jason to immediately deliver possession of the Assets in whatever format they are maintained, to the Sales Officer or if the Sales Officer so directs, to Kingsmere for administration pending their sale. The ancillary terms also require Mark to provide information and documentation about commissions received since January 24, 2024 and other accounting regarding the Transferred Policies, or assist the Sales Officer in obtaining that information.

Unfortunately, the Sales Officer considers this to be necessary because of Mark’s conduct and his refusal to co-operate with the Sales Officer. The Sales Officer has the justified concern that, if it does not have possession and control of all of the Assets that are being offered for sale as part of the Sale Process, it might not be able to deliver them to a successful bidder when the time comes to do so if delivery is dependent upon Mark’s co-operation, which has been lacking in the past. It is equally important for the Sales Officer to have information about the commissions Mark has been collecting as that information could inform how the policies are valued by a prospective purchaser.

Pursuant to this court’s January 24, 2024 order, Mark is required to report on and pay to the Sales Officer all commissions he has received in respect of the Remaining Policies (as defined therein). Pursuant to the further order of June 14, 2024, Mark was ordered to do the same (reporting and commission remittance) in respect of the Transferred Policies (as defined therein) and any other policies transferred to Mark or his affiliates since January 24, 2024 (collectively, the “Policies Orders”). Mark receives the commissions paid under the Transferred Policies and the Remaining Policies he administers.

Mark has refused to report and remit any of the commissions received in respect of the Transferred Policies, despite the clear terms of the Policies Orders. Mark complains that when the June 14, 2024 order determined that the Transferred Parties were to be treated as part of the Property of the Companies and that they would be subject to the same reporting and remittance requirements as provided for in the January 24, 2024 order that applied to the Remaining Policies Order, it burdened Mark with administering 789 Transferred Policies in addition to the seven Remaining Policies that he had been assigned responsibility for. The burden and associated cost of administering the Transferred Policies was, to my understanding, to be the subject of the Administrative Expenses Motion that was adjourned. That is not an excuse for Mark’s non-compliance.

As part of the Sale Process Order, the Sales Officer is seeking an order to reinforce the need for Mark’s compliance with the reporting and remittance requirements of the Policies Orders. It seeks an order that he report and remit commissions he has received within 10 days. This is required because the Sales Officer intends to include in the data room information on the amount of monthly commissions paid and to be paid by the carriers over the next 3-5 years and does not want to be faced with any further delays.

Mark has raised a number of arguments in opposition to the requested ancillary relief relating to the Policies.

Mark first claims this relief is unnecessary because it has already been ordered. He suggests that because he has already been ordered to do this and has not done so the court cannot and should not order him to do so again. The irony of this submission is something to behold.

In his affidavit, Mark now explains that the information required to administer the Policies, or information generated by the administration function, reside on the IT servers at the Insurance Carriers/PPI. He further claims that the Carriers insist that the insurance agents operate in the Carrier's/PPI's environments. Mark claims that all PPG has are duplicates of certain highly sensitive information that resided at the Carriers, collected over time, which is extremely dated. Mark states that this information (approximately 50 banker boxes) will be delivered to a FSRA-licensed broker once one is contracted (as he puts it, with the Carriers represented by the Policies). This is a complicated way of saying that once another licensed broker acquires the policies, it can get the information directly from the Carriers/PPI and Mark will deliver 50 boxes of outdated information. Mark does not offer any insight into the level of co-operation that he will offer or how long this transfer will take.

Mark further suggests that he has not provided the previously ordered disclosure because he claims that to do so might put him offside of regulatory requirements or restrictions. This argument was not raised at the time the Policies Orders were made, nor has any specific regulatory restriction been identified.

Mark also asserts that the information and accounting he has been ordered to provide is too onerous, and that he has been waiting for information to be provided from PPI. He says he requested this information from PPI in September 2024, and that a report was expected within 90 days. No such report had been provided by the January 21, 2025 hearing.

These excuses were not developed in the evidentiary record at the time the Policies Orders were made. What the Sales Officer seeks to do now is ensure that it has the information and documentation that it needs to undertake the Sale Process. Mark has known that there was going to be a Sale Process involving the Policies since December of 2022. He has had plenty of time to address these concerns. Instead, he raises them as obstacles to what should otherwise be a straightforward Sale Process.

In the circumstances, it is appropriate for the court to re-affirm Mark’s obligations under the Policies Orders insofar as they impact the timely and efficient completion of the Sale Process in the manner proposed as part of the Ancillary Relief in the Sale Process Order. Mark is obligated to provide, or carry through the arrangements for PPI to provide, the necessary information about the Policies and commissions he has received, and he is obligated to remit those commissions to the Sales Officer to hold until the final winding up and distribution after the Sale Process has concluded.

Next, Mark argues that it would be inappropriate for the court to make this order because he has appealed the June 14, 2024 Order that found that the Transferred Policies (currently held and being administered by PG) form part of the Property of the Companies (which means that they are part of the Assets to be sold by the Sales Officer).

Mark did not move for a stay of the June 14, 2024 Order pending the appeal. He maintains that under Rule 63.01(1) of the Rules of Civil Procedure, R.R.O. 1990, Reg. 194, the delivery of his notice of appeal in July, 2024 stayed the June 14, 2024 Order. Recognizing (as he must) that the automatic stay under that Rule is only in respect of any provision of the order for the payment of money, Mark argues that there was an automatic stay because the June 14, 2024 Order requires a payment of commissions (money). For this, he relies on Piersanti v. Alfano (unreported, decision of the Court of Appeal for Ontario dated June 7, 2011, M40036 C52738), that dealt with whether an order that required the appellant to pay the sum of $2,500,000 into court to the credit of the plaintiffs was an order for the payment of money within the meaning of r. 63.01(1).

Mark argued that this Piersanti case concluded that such an order was stayed under Rule 63.01. The Sales Officer provided a more fulsome submission and review of this case (and a related later endorsement that provided a more in depth explanation of what was and was not stayed by the appeal in that case (Alfano v. Piersanti, 2011 ONSC 6155, paras 22-25), which disclosed that the order for the payment into court was not stayed by r. 63.01, only the judgment for the payment of a fixed sum of damages was. According to Piersanti, an order for payment of funds into court for the credit of action is not an order for payment of money within meaning of r. 63.01 and is not stayed.

The Sales Officer argues that the order for Jason and Mark to remit commissions they receive in respect of the Policies to the Sales Officer is analogous to an order for the payment of funds into court for the credit of an action. Here, the commissions to be paid to the Sales Officer will be held and accounted for in the final reconciliation and distributions in connection with the winding up of the Companies. This court has already directed that any payment of commissions to the Sales Officer by either JDM Parties or the DBS Parties is without prejudice to any later established offsetting expenses, taxes and the like.

The order to pay commissions to the Sales Officer was not an order regarding the entitlement to those commissions or an order for damages. It is more akin to payment into court, since the commissions will simply be held by the Sales Officer and eventually distributed to the shareholders upon the winding-up of the Companies after the Sale Process has concluded. That analogy is apt and, applying the same logic, I find that there was no automatic stay of that part of the Policies Orders requiring Mark to remit commissions he has received since the Appointment Order under the Transferred Policies or the Remaining Policies to the Sales Officer.

It was further noted that even if there was a stay of the part of the Policies Orders requiring remittance of the commissions to the Sales Officer, r. 63.01 would not stay any of the other non-monetary aspects of the Policies Orders. That would include aspects of the Policies Orders that deal with accounting and reporting and the delivery of information and records.

In that regard, and as discussed earlier in this endorsement, Mark claims that he does not have the authority, access or ability to provide anything more than what he has already provided to the Sales Officer and that he has done all that he can to obtain this information from the third party who can provide, PPI, by writing on September 6, 2024, asking it to provide the information under the Policies Orders in relation to the 789 insurance policies. He included the response he received from PPI, that they “will do our best to provide the information you've requested within 90 days”. More than 90 days had passed since this correspondence from PPI as of the January 21, 2025 hearing date and Mark provided no evidence of follow up within or after the 90 days. He was unable to provide an update after the court lunch break.

During the January 21, 2025 hearing, the court was advised that the appeal by the DBS Parties was scheduled to be heard on February 19, 2025. There has been no decision from the Court of Appeal that I am aware of. Since there is no stay and the June 14, 2024 Order has not been set aside by the Court of Appeal, from this court’s perspective it must be complied with. There may otherwise be consequences for the DBS Parties, including restrictions on their ability to take steps or bring motions while they remain in default. This may have implications for the JDS Parties’ Administrative Expenses Motion under Rule 60.12.

If Mark does what the Sale Process Order requires and all of the Transferred Policies and Remaining Policies are transferred to Kingsmere for their continued administration, the Administrative Expenses Motion may not need to proceed. If the going forward costs and expenses for the administration of the policies are no longer being incurred by the DBS Parties, then the accounting and determination of responsibility for the prior costs and expenses incurred by the DBS Parties could be addressed in the final reconciliation before any distributions are made following the winding up of the Companies. This and any other matters that the parties intended to raise regarding the Administrative Expenses Motion can be addressed at the next case conference now scheduled for March 19, 2025.

Non-Solicitation Order

The Sales Officer is seeking an order that Mark and Jason, directly or indirectly, not be permitted, for a period of three years, to solicit business from the existing clients of PPG that are within the book of business to be acquired by any Prospective Purchaser in the Sale Process, so as to protect the eventual purchaser's investment. In the view of the Sales Officer, such a restriction is reasonable and appropriate in the circumstances. Conversely, it is the view of the Sales Officer that, without such a restriction, it is unlikely to be able to maximize value for the Assets. The Fourth Report of the Sales Officer explains that these types of provisions are common in commercial transactions involving the sale of a business.

Mark and Jason agree that to maximize the value of the Assets to be sold under the Sale Process Order, there needs to be a non-solicitation order so that the parties cannot solicit policy holders whose policies are purchased for a reasonable period of time after any court approved sale transaction closes.

The general jurisdiction for granting this order can be found in s. 207(2) of Ontario’s Business Corporations Act, RSO 1990, c B.16, authorizing the court to make any order it sees fit under s. 297(1). The Appointment Order was made under s.207(1)(b)(iv) of the OBCA and the Sale Process Order sought by the Sales Officer, including the non-solicitation order, serves as a mechanism by which the Appointment Order is to be implemented.

The Supreme Court of Canada explained in Payette v. Guay Inc., 2013 SCC 45, para 37, that:

The inclusion of non-competition and non-solicitation clauses in a contract for the sale of a business is usually intended to protect the purchaser's investment. In limiting the vendor's right to compete with the purchaser and preventing the vendor from working for a competitor of the purchaser for a certain time after the transaction, such clauses enable the purchaser to protect its investment by building strong ties with its new customers "without fearing, for a given period, competition from the vendor."

While agreeing that there is a need for a non-solicitation order, Mark has proposed a number of changes to the language to narrow its scope.

The prospect of policyholders being solicited is not a hypothetical concern in this case. Both Mark and Jason remain in the business of selling life insurance and health and wellness benefits: Mark, through his company PG, and Jason as an employee of Richardson Wealth Insurance Services Ltd. Mark has already been found to have solicited the clients associated with the Transferred Policies to move with him to PG when he transferred his advisor’s license out of the Companies. In that prior instance, one of the points of disagreement was about whether certain customers had been solicited or had, on their own initiative, asked to move their policies to Mark. We have already seen in this case that this can be a factually complex issue.

The Sales Officer has quite properly attempted to avoid the uncertainty of this happening to the detriment of a third-party purchaser. That is why the Sales Officer has proposed a blanket restriction on Jason and Mark selling life or group health insurance products to, or soliciting or accepting business from any Existing Clients (which are defined to be any clients maintaining or holding a policy of life insurance or group health and wellness benefits forming part of the Assets at the time of the court approval of any sale), and from attempting to influence them away from or interfering in their economic relationships with, the Sales Officer, the Interim Broker or the purchaser, all for a period of three years.

The Sales Officer considers these restrictions to be commercially efficacious and necessary to protect the book value of the Assets and secure the best possible price upon their sale. These are among the factors that the court must consider under CCM in connection with the approval of the terms of a Sale Process. The proposed language tracks very closely the language that the court adopted and imposed in Payette, which the court found to be reasonable in scope and duration and approved. The parties in Payette had agreed to the terms of this covenant but the court still had to be satisfied that they were reasonable in their scope and duration.

At the January 21, 2025 hearing, the Sales Officer did agree to carve out of the solicitation restrictions non-targeted, advertising and websites. The Sales Officer did not, however, agree with the more narrow definition of “Business” for purposes of the non-solicitation language that Mark proposed. The rationale for Mark’s proposed changes to that definition was that he considers the existing definition to be too vague. I do not agree that it is vague, nor do I agree that Mark’s proposed changes to this definition bring better clarity to what the non-solicitation order is directed at. It is simple: the parties cannot do business with existing customers of the former business of the Companies (including those holding Transferred Policies and the Remaining Policies) for three years so that any court approved purchaser knows that they will not face that interference and can factor that into the price that they are prepared to pay for the Assets.

Mark’s main points of contention with the three-year duration (he proposes 18 months) and the scope of the Business activities covered (Mark seeks to limit it to soliciting Transferred Clients only), do not provide the level of protection that the Sales Officer considers to be necessary to maximize recoveries in the Sale Process. This is not a negotiation. The Business was ordered to be sold and wound up by the Sales Officer and the Sales Officer has indicated what it considers to be necessary in the proposed non-solicitation restrictions to ensure that a purchaser will pay fair value for the Assets. These are terms that a would-be a purchaser of the Business would reasonably insist upon (as the purchaser did in Payette).

The wording of the non-solicitation clause, as proposed by the Sales Officer with the one agreed modification to permit non-targeted advertising and websites, is approved.

The Preservation Orders

i) Thornbridge Investment Payment

Thornbridge Capital Group Inc. ("Thornbridge") is an investment company that Jason and Mark own equally. It is unlikely to be used by Mark and Jason to make further investments given their acrimonious dispute. It carries on no active business. In or around October 2024, Thornbridge received a payment from an investment it held in Legacy Lifestyles (the "Investment Payment"). Mark controls Thornbridge's bank account. In or around November 2024, Mark caused Thornbridge to issue a bank draft in the amount of US$98,000 to each of JDM Group Ltd. ("JDM", Jason's holding company) and Direct Broadcasting Satellite Communications Corp ("DBS", Mark's holding company).

Although not part of the Appointment Order (because it was inactive at the time), it is clear that Thornbridge will eventually need to be wound up or dissolved. On a winding up, liquidation, insolvency or bankruptcy of a company, creditors are entitled to be paid in priority to shareholders. See OBCA, s. 221(1); Bankruptcy and Insolvency Act, RSC 1985, c B-3, s. 136(1).

PPG is, according to its books and records, a creditor of Thornbridge. Of the total $443,445 that is owed to PPG by related corporations including Thornbridge, PPG’s accountant has advised the Sales Officer that Thornbridge owed PPG $336,000 of that total. The Sales Officer maintains that, as a creditor, PPG should have been repaid before any distributions were made to Thornbridge shareholders (Jason and Mark or their holding companies). The Sales Officer thus seeks an order for the distributed sales proceeds to be paid to the Sales Officer to be held until the issue can be properly adjudicated.

Mark appears to rely on the fact that at the time Thornbridge received the Investment Payment, Jason asked Mark to split the funds and pay them out to each of Mark and Jason equally. However, the Sales Officer took a different view and demanded that the Investment Payment be paid to the Sales Officer, either to reduce what Thornbridge owed to PPG or, at the very least, to be held in trust by the Sales Officer pending the final reconciliation of the winding up of the Companies and Jason and Mark parting of ways. In response to the demand from the Sales Officer, Jason paid his 50% share of the Investment Payment to the Sales Officer.

Mark refuses to do so. The Sales Officer recently learned that DBS took its US$98,000 share of the Investment Payment and invested it on behalf of DBS in a US dollar Non-Redeemable Guaranteed Investment Certificate bearing certificate number 100000029KB2M, held at Scotiabank (the "GIC"). Mark maintains that the Sales Officer is not a receiver and therefore has no power to request the repayment of funds or to recover a debt owing to PPG.

Mark also complains that this relief was added to the Sales Officer’s Amended Notice of Motion just before the holidays and should not have been considered at the January 21, 2025 hearing. This relief was specifically discussed at the December 9, 2024 case conference. It had originally been raised as an urgent issue that the court was being asked to consider and decide then. The urgency was addressed through an interim December 9, 2024 consent preservation order that prevents Mark from cashing his GIC (or from removing funds from any of PPG’s bank accounts).

Mark is now offering for that interim consent order to remain in place until the final winding up of the Companies. The JDM Parties and the Sales Officer argue that if the funds are frozen and cannot be used by the DBS Parties anyhow, then there is no prejudice in those funds being paid over to be held by the Sales Officer pending the final winding up. The concern that both the JDM Parties and the Sales Officer have with Mark’s proposal to continue the interim consent preservation order is that Mark does not have a good track record of complying with court orders. The current order still depends on Mark’s compliance.

In the circumstances, the Sales Officer asks for an order requiring Mark to transfer the GIC he says he has invested the Thornbridge distribution funds in, or to or pay the proceeds thereof, to the Sales Officer to be held in trust pending further order of the court. This avoids any concerns about the Sales Officer taking on an expanded role at this time of collecting debts owing to PPG (and the need to appoint it as a receiver, discussed below). It allows the Investment Payment to be held pending the final reconciliation and accounting among and between the shareholders of the Companies upon the winding-up. It is clear from the history of these proceedings that there will be many matters that the shareholders will be required to account for and reconcile, and ensuing credits and debits against their entitlements, before the final distributions will be made. How those funds will flow for tax, accounting or other purposes remains to be determined.

Since Mark is prepared to already prepared to freeze the Investment Payment in the GIC, and in light of the long history of distrust between Jason and Mark, I find it to be just and convenient for those funds to be held by the Sales Officer as a neutral party. Mark should either transfer the GIC to the Sales Officer or pay the proceeds of the GIC to the Sales Officer as has been proposed.

ii) PPG’s Bank Account

PPG no longer operates its Business. There is approximately $58,000 in the Company's bank account. Mark controls PG's bank account. The account balance has been substantially depleted since the Appointment Order was made.

Even though the Appointment Order requires that the Sales Officer approve any expense payments out of the ordinary course for PPG, various payments made in the past from PPG's bank account by Mark have been challenged by Jason and remain unresolved. This court has found there was a strong prima facie case that certain of those payments are open to attack as having been made contrary to the terms of the Appointment Order. That is the subject of a different dispute between the JDM Parties and the DBS Parties.

Since PPG no longer is carrying on business, there should be no ordinary course payments to be made by PPG from its bank account. In the circumstances, the balance in the PPG bank account should be paid over to the Sales Officer to avoid the risk of any further dissipation. The Sales Officer has confirmed, in response to certain concerns raised by Mark, that if there is a need to pay professionals, such as accountants, funds from this account can and will be used for legitimate expenses such as that.

The term of the proposed Sale Process Order directing that the remaining funds in PG’s bank account be paid over to the Sales Officer is fair, reasonable and appropriate, pending the winding-up and final distribution of the Companies’ Assets (which include the cash in the Companies’ bank account).

Remaining Unopposed Terms of Sale Process Order

The remaining terms of the Sale Process Order are not opposed. They are reasonable and appropriate in the circumstances and aligned with the applicable CCM factors, as informed by the Soundair principles.

Some of the unopposed terms are unrelated to the proposed Sale Process but this is a convenient time and place to address them.

Given that Mark and Jason are no longer working together and PPG is to be wound up, there is no reason for PPG to continue to maintain their life insurance policies and pay the premiums. Mark says he has now terminated the insurance policy on his life. Jason has been given the opportunity to take over the payment of the premiums, or allow his policy to lapse. There is no reason from the perspective of the Companies to maintain these policies and they will not enhance the value of the Assets being sold in the Sale Process, so requested approval to stop paying these premiums is fair, reasonable and appropriate in the circumstances. This is non-contentious, as are many other aspects of the proposed Sale Process Order (not otherwise addressed in this endorsement).

The Receivership Motion

The JDM Parties support the Sales Officer's Sale Plan and the enhanced powers it is seeking. The JDM Parties agree that the enhanced powers for the Sales Officer are helpful in light of the actions of Mark, but say that they are insufficient. They maintain that the Sales Officer needs to have the full powers of a receiver and manager to ensure an expeditious and equitable resolution of this matter, which has carried on for far longer than was expected when the Appointment Order was made in December of 2022.

The JDM Parties further contend that because of Mark’s conduct, PG needs to be joined in and subject to supervision by a receiver. The specific conduct they refer to includes the Challenged Expenses, the Transferred Policies, and his continued refusal to account for and pay over commissions earned on the Transferred Policies and the Remaining Policies that are now with PG. While PG was not an active company when the original Appointment Order was made, it is now because of Mark’s actions. PG is now actively involved in the administration of the Transferred Policies and the Remaining Parties assigned to the DBS Parties. The JDM Parties are concerned that other Assets of the Companies may have been transferred by Mark to PG, such as computers, computer and accounting systems, and records.

Mark also tries to defend his actions involving PG on the basis that they are equivalent to Jason having gone to work for one of the PG clients that took back its business. However, that was pursuant to a contractual right that the client had to do so and is not on the same footing as what Mark has done with PG.

Mark maintains that once PPG was no longer operating he was at liberty to arrange to move the Transferred Policies to PG, and have them administered by it. Now, according to Mark, PG has those Transferred Policies and other policies that it has underwritten since January 2021 when he started selling insurance through PG directly. He raises various legal and factual grounds in opposition to both the addition of PG to the court’s supervision (whether by the Sales Officer acting as such, or acting as a receiver and manager) and to the expansion of the role of the Sales Officer into a receiver manager. Mark also contends that since PPG and TBG are no longer operating businesses there is no need for the expanded powers of a receiver manager to complete what needs to be done so that they can be wound up.

Without any factual foundation, Mark also suggested that the appointment of a Receiver could trigger defaults or other consequences under contracts with insurance companies, for PG in particular. However, Mark was unable to point to any particular contractual provision that specified negative consequences arising from the appointment of a receiver.

An earlier order was made in the court’s May 12, 2023 endorsement (JDM Group Ltd. v. Direct Broadcast Satellite Communications Corp., 2023 ONSC 2866), confirming that the powers of the Sales Officer would include the investigation of certain Challenged Expenses (in light of the prima facie case that the JDM Parties made out in respect of their challenge to the expenses Mark claimed to be paying from PPG).

The Sales Officer takes no position on this motion by the JDM Parties to further expand its mandate in the various ways in which the JDM Parties propose to do so. It consents to the expansion of its mandate in any aspect that the court orders. The Sales Officer does note that the current provisions of the Appointment Order requiring PG, as third party, to co-operate with the Sales Officer have not resulted in the disclosure of the information and documents that the Sales Officer seeks. The Appointment Order presumes that the parties themselves, and third parties, will co-operate with the Sales Officer. That has not been the Sales Officer’s experience when it comes to dealing with Mark and PG.

The parties have made detailed submissions on the applicable law and the test to be applied for the appointment of a receiver. Refinements were made during the hearing to eliminate some of the specific paragraphs of the requested Receivership Order that are not necessary to achieve the immediate objective of the JDM Parties.

The JDM Parties rely heavily on the case of Gojkovich v. Buhbli Organics Inc., 2023 ONSC 7254, paras 109-114, which involved the appointment of a court officer in the context of an oppression remedy application. Mark maintains that this case is distinguishable because it involved a finding of oppression, a non-party company that was created for the sole purpose of taking the goodwill and business of the original company (here Mark places much reliance on the fact that PG had existed for a long time, even though it was not actively carrying on business while PPG and TBG were operating), but also because, in the end, the order was not granted against a non-party company.

Without getting into the merits of each aspect of the test for the appointment of a receiver, I am not persuaded that it is just and convenient at this time to change the mandate of the Sales Officer. It has a Sale Plan, the Sale Process Order is being granted with certain enhanced powers and protections to give effect to the Sale Plan (for reasons detailed earlier in this endorsement) and that should run its course. The JDM Parties acknowledged during oral submissions that the objective of the requested Receivership Order is to get the Property of the Companies that is to be sold into the hands of the Sales Officer. The Sales Officer has gone to a lot of trouble to try to get to that point with the proposed Sale Process Order that the court has now approved.

This is not dissimilar from the case of GE Real Estate v. Liberty Assisted Living, 2011 ONSC 5741, in which the court declined to appoint a receiver but expanded the investigative and monitoring powers of the court appointed sales officer.

If some of Mark’s objections to the terms of the Sale Process Order had prevailed, there might have been a justification to appoint the receiver and that might have required me to undertake the full analysis now (one example would be the argument that Mark made that only a receiver of PPG can take steps to demand payments owing to PPG from its creditors such as Thornbridge). However, since his objections did not prevail, I am not persuaded that the court needs to go into the full analysis of the Receivership Motion at this time.

Accordingly, in the exercise of my discretion I have determined that the appropriate thing to do now is adjourn JDM’s Receivership Motion sine die. A case conference can be scheduled if the JDM Parties decide there is good reason to pursue this motion, at which the court will consider whether the motion should be resurrected and decided and the extent to which supplementary evidence and submissions may be required to do so.

Costs

Since I am adjourning the Receivership Motion, I am not making any award of costs in respect of that motion at this time in favour of any party (both the JDM Parties and the DBS Parties were seeking costs against each other in respect of that motion). The costs of the Receivership Motion may be decided if the motion later proceeds, or are otherwise reserved to the determination of costs upon the winding-up and final distributions that will be made at the conclusion of these proceedings.

The Sales Officer confirmed at the January 21, 2025 hearing that it is not seeking a specific costs award against any party in respect of either the Sale Process Motion or the Receivership Motion. It maintains that no costs should be ordered payable by it. Mark confirmed that he is not seeking any costs in respect of the Sale Process Order, nor has Jason sought any costs in respect of the Sale Process Order.

Final Disposition

I will wait for the Sales Officer to provide a final form of Sale Process Order to reflect the outcome of its motion (as set out in this endorsement). That order will be signed.

Given that I am adjourning the Receivership Motion, there should be no order required in respect of that motion.

Barbara Kimmel
Date: March 14, 2025

[1] The court office has confirmed that a case conference has been scheduled for March 19, 2025 to discuss the March 25, 2025 motion date.

[2] The Soundair factors to be considered at the time of sale approval include:
a) whether sufficient effort has been made to obtain the best price or whether the court appointed officer has not acted improvidently;
b) whether the interests of all parties have been considered;
c) the efficacy and integrity of the process by which offers are obtained; and
d) whether there has been an unfairness in working out the process.