Court File and Parties

Court File No.: CV-25-0306-0000 Date: 2025-08-27

ONTARIO

SUPERIOR COURT OF JUSTICE

B E T W E E N:

WHITESAND FIRST NATION and 1000446012 ONTARIO INC.

H. Schacter and K. Lewis, for the Plaintiffs

Plaintiffs

- and -

PETER ANDREW VERCOUTEREN, RICHARD MILLER RONEY, PAUL JAMES JEMMETT, PRIVATE POWER SYSTEMS INC., and 1412739 ONTARIO INC. (also known as ACHLIS)

K.W. McKenzie and J. Emmans, for Defendants

Defendants

HEARD: August 12, 2025, at Thunder Bay, Ontario

Madam Justice R.A. Lepere

Decision on Motion

Overview

[1] An ex parte Mareva injunction order was granted on August 1, 2025, to the Plaintiffs, Whitesand First Nation and 1000446012 Ontario Inc. against the Defendants, Peter Vercouteren, Richard Roney, Paul Jemmett, Private Power Systems Inc. and 1412739 Ontario Inc. (also known as Achlis) (the "Mareva Injunction Order").

[2] The Mareva Injunction Order requires the Defendants and their servants, agents, employees, assigns, officers, directors and anyone else acting on their behalf from directly or indirectly selling, removing dissipating, alienating, transferring, assigning, encumbering, or similarly dealing with any assets of the Defendants, including but not limited to, the three accounts of the Defendant, 1412739 Ontario Inc. listed in Schedule "A", up to the value of $17,550,000.00 CDN.

[3] The Mareva Injunction Order goes on to require that the Plaintiffs' motion would come back for a hearing on notice, after the motion record and the Mareva Injunction Order were served on the Defendants. This is often referred to as the "comeback hearing". The comeback hearing was before me today.

[4] In addition to the comeback hearing, the Defendants filed their own motion, which was also before me today, seeking the following relief:

a. that the Mareva Injunction Order be struck and set aside as the Plaintiffs did not make full, complete and frank disclosure on the ex parte motion;

b. that this action be stayed pending the parties engaging in the ADR process mandated by the agreement between the parties;

c. an order for security for costs against the Plaintiffs in the amount of $250,000.00; and

d. in the alternative, an order amending the Order to allow the Defendants access to spend such funds as they deem necessary to pay for ordinary living expenses and legal advice and representation.

[5] The Mareva Injunction Order was to expire today. Since my decision on the motions was taken under reserve, I made an order on August 12, 2025, further extending the Mareva Injunction Order until the release of this decision.

Evidence of the Parties

A. Evidence of the Plaintiffs

[6] The Plaintiff, Whitesand First Nation (the "First Nation") is an Ojibwa First Nation located near Armstrong, Ontario. For more than a decade, the First Nation has wanted to construct and operate a biomass heat and power facility (the "Power Plant") for the purposes of bringing economic opportunities to the First Nation and its members. The plan was that the Power Plant would generate electricity through the burning of forest biomass and that the electricity would be sold at a profit to the Independent Electricity System Operator (IESO).

[7] The First Nation would own the Power Plant and operate it through an entity that was wholly owned and controlled by the First Nation. Sagatay Cogeneration LP ("Sagatay") was created for that purpose.

[8] The Plaintiff, 1000446012 Ontario Inc. is a corporation incorporated pursuant to the laws of Ontario by the First Nation. It was incorporated to be a holding company that would receive the funding for the Power Plant and would ultimately earn the profits from the Power Plant (the "Holding Company").

[9] The Plaintiffs provided evidence on these motions via affidavit evidence sworn by Craig Toset. He has been employed by the First Nation for approximately 25 years in various capacities and has been the person responsible for guiding the First Nation in relation to the Power Plant project.

[10] The First Nation learned that approximately $60 million would be needed to construct and begin operation of the Power Plant. The plan was to fund the project through grants from both the federal and provincial governments, as well as conventional bank financing.

[11] In the summer of 2020, representatives of the First Nation met with the Defendants, Peter Vercouteren, Paul Jemmett and Richard Roney (the "Individual Defendants"). They represented to the First Nation that they had expertise in constructing and operating power plants like the one the First Nation wanted to construct, and they would be able to secure financing for the project.

[12] More specifically, the First Nation was advised that two corporate entities owned by the Individual Defendants could assist them. The Defendant, Private Power Systems Inc. ("PPSI") could build and coordinate the operation of the Power Plant. The Defendant, 1412739 Ontario Inc., (the "141 Corporation") previously known as Achlis, could arrange the financing needed for the project.

[13] As of July 10, 2025, the directors of PPSI were Peter Vercouteren, Richard Roney, and Paul Jemmett. Paul Jemmett was also listed as an officer of PPSI.

[14] As of July 10, 2025, Peter Vercouteren was the sole director of the 141 Corporation.

[15] In late 2022, the First Nation secured funding in the form of a grant from the Government of Canada ("Canada") in the amount of $22.5 million CDN for the Power Plant project (the "Grant").

[16] The Grant was advanced to Sagatay. Pursuant to the terms of the Grant, the Grant had to be expended by March 31, 2025, and had to be used for the intended purpose of the Power Plant, failing which Canada could claw it back with interest.

[17] The Grant was received by Sagatay in January 2023. The First Nation then turned their attention to securing the additional funding for the Power Plant. They continued negotiations and discussions with the Defendants. More specifically, the following was agreed to:

a. in exchange for arranging financing and helping to coordinate the construction and operation of the Power Plant:

i. a holding company would be incorporated into which the financing and profits from the Power Plant would be deposited;

ii. PPSI would become the owner of 49% of the beneficial shares in the holding company, which shares would be surrendered to the First Nation if financing was not secured by July 15, 2023; and

iii. two of the individual Defendants, Richard Roney and Paul Jemmett would be appointed as directors of the holding company along with band representatives;

b. in order to secure the financing needed for the Power Plant, the First Nation would:

i. cause $21.5 million CDN of the Grant (the "Funds") to be transferred to the 141 Corporation with the Funds being held in a trust in a segregated account at a Canadian bank with the account being solely owned and controlled by the 141 Corporation;

ii. the Funds would be used as security or collateral for the $60 million in financing to be obtained by the Defendants;

iii. the Funds in the segregated account would be insured; and

iv. if the financing was not obtained by July 15, 2023 and the agreement was not extended by the parties, the agreement would be null and void and the 141 Corporation shall return the Funds and surrender its shares in the Holding Company to the First Nation.

[18] PPSI, the 141 Corporation and the Holding Company, entered into an Equity Investment Agreement dated January 31, 2023, reflecting the above terms (the "Agreement").

[19] Article 12 of the Agreement states:

"12.1 The parties shall attempt in good faith to resolve any disputes arising out of or relating to this Agreement promptly by negotiations between officials of each party who have authority to settle the controversy.

12.2 If the matter has not been resolved by negotiation within thirty (30) days, the parties shall attempt in good faith to settle the dispute by mediation in Toronto, Ontario.

If the matter has not been resolved by mediation within ninety (90) days of mediation, then the parties may pursue all legal and equitable rights."

[20] On March 2, 2023, $21.55 million CDN was transferred to the 141 Corporation. An additional $500,000.00 CDN was sent at the request of Mr. Vercouteren who stated that the funds had to be held in USD, and the total had to be $15 million USD. Therefore, he needed an additional $500,000.00 CDN for the conversion.

[21] No financing was secured by the July 15, 2023, deadline. While the parties did not expressly extend the Agreement, they continued to work towards securing financing beyond July 15, 2023. The Plaintiffs were repeatedly told by the Defendants that the financing was forthcoming.

[22] On March 12, 2024, the Plaintiffs were provided with confirmation that $15 million USD was being held in a segregated account owned and controlled by the 141 Corporation at the Royal Bank of Canada, bearing an account number ending in 2036 (the "Segregated Account").

[23] In June 2024, $4 million from the Segregated Account was returned to the Plaintiffs. The balance of $17.55 million CDN should have thereafter remained in the Segregated Account. When the Plaintiffs asked for proof of same, the Defendants provided documentation in January 2025 showing that the Funds were now being held in two different accounts totaling $11,548,144.96 USD. The Segregated Account had a balance of $10,047,932.01 USD as of January 27, 2025. An additional account owned by the 141 Corporation with an account number ending in 2044 had an additional balance of $1,500,212.95 USD.

[24] By March 2025 no financing had been secured by the Defendants.

[25] On March 21, 2025, Canada demanded the return of the Grant from Sagatay since their records indicated that the Plaintiffs had not incurred any project costs to date. No interest would be charged if the Grant was repaid by May 5, 2025.

[26] On April 14, 2025, the Chief of the First Nation asked that PPSI and the 141 Corporation return the Funds which should have equaled $17.55 million CDN. When the funds were not returned a further request was made on April 30, 2025.

[27] On May 22, 2025, at a meeting with Chief and Council, Mr. Vercouteren advised that the financing would be forthcoming shortly and if it was not secured by the end of May 2025, the Defendants would return the remaining amount of the Grant.

[28] Financing was not secured by the end of May 2025. The remaining amount of the Grant was not returned by the Defendants.

[29] On June 5, 2025, the legal representatives of the First Nation sent a demand to PPSI and the 141 Corporation for the return of the remaining amount of the Grant.

[30] On June 10, 2025, Sagatay received a statement from Canada showing that they were demanding back the $22.5 million plus interest in the amount of $114,657.53.

[31] On June 17, 2025, the Chief of the First Nation sent a letter again, demanding the return of the remaining amount of the Grant plus interest to the Defendants. No response was received.

[32] On June 27, 2025, a further demand for the return of the remaining amount of the Grant was sent to the Defendants. No response was received.

[33] On July 17, 2025, a further demand for the return of the remaining of the amount of Grant was made along with requests for information about which branch the Segregated Account was located at and contact information for the branch manager. No response was received.

[34] The Plaintiffs brought an ex parte motion for a Mareva injunction for the remaining amount of the Grant held by the 141 Corporation ($17.55 million CDN) which was heard on July 31, 2025, with the order being granted on August 1, 2025.

[35] The Plaintiffs assert that based on the information provided by the Defendants about the value of the Segregated Account, there are portions of the Grant that are unaccounted for. In support of this, they provide the following evidence based on historical exchange rate data from the Bank of Canada:

a. when the $22.55 million CDN was transferred to the 141 Corporation on March 2, 2023, this would have purchased more than the $15 million USD that was deposited to the Segregated Account (shortfall of at least $397,475.00 USD); and

b. when the $4 million CDN was returned to the Holding Company in June 2024, the balance in the Segregated Account should have been at least $12,077,713.70 USD but as of January 2025 there was only $11,548,144.96 USD now being held in two separate accounts (shortfall of $529,568.83 USD).

[36] The Plaintiffs assert that the Defendants have provided no accounting of the Segregated Account of the Funds or an explanation for the shortfalls identified above, aside from an assertion that they had to pay for insurance. However, the documentation provided by the Defendants to support this provides limited information about the insurance and they have redacted the cost of the insurance.

B. Evidence of the Defendants

[37] The Defendants did not file any evidence in response to the Plaintiffs' motion for the Mareva injunction and did not file any evidence in support of its own motion heard today.

Issues to be Determined

[38] The issues on the motions are as follows:

a. should the Mareva Injunction Order be set aside on the basis that the Plaintiffs did not provide the court with full, complete and frank disclosure at the hearing of the ex parte motion;

b. if not, are the Plaintiffs entitled to an order for a Mareva injunction as per the terms of the Mareva Injunction Order;

c. if the Plaintiffs are entitled to a Mareva injunction order should the terms of the Mareva Injunction Order be amended;

d. should the Plaintiffs be ordered to pay security for costs in this action; and

e. should the action be stayed pending the parties engaging in the ADR process provided for in the Agreement between the parties?

Analysis and Disposition

A. Should the Mareva Injunction Order be Set Aside?

[39] Pursuant to r. 39.01(6) of the Rules of Civil Procedure, R.R.O. 1990, Reg. 194 (the "Rules"), there is an obligation on a party seeking an ex parte order to make full and fair disclosure to the court of all material facts. A failure to do so is sufficient ground for setting aside any order obtained without notice.

[40] The Defendants argue that the Mareva Injunction Order should be set aside as the Plaintiffs did not make full and fair disclosure to the court of all material facts at the ex parte hearing. More specifically, they assert that:

a. the Plaintiffs did not file evidence from persons who have direct knowledge of the material facts and the individual that swore the affidavit in support of the ex parte motion was not the appropriate affiant;

b. the affidavit filed in support of the ex parte motion contains hearsay and opinion evidence;

c. the Plaintiffs' evidence failed to detail various agreements between the parties that requires disputes be referred to ADR;

d. the Plaintiffs failed to explain the involvement of Sagatay;

e. the Plaintiffs did not provide any evidence to identify the general partner or limited partners of Sagatay;

f. the Plaintiffs did not disclose agreements between Canada and Sagatay regarding the advancement of the Grant;

g. the Plaintiffs did not highlight the arguments that the Defendants would make if had been in attendance; and

h. while the Plaintiffs assert that Canada has demanded the Grant back, they have not provided any evidence with respect to agreements and interactions with Canada since that demand was made.

[41] For the reasons that follow, I do not accept the position of the Defendants. I find that the Plaintiffs fully and fairly disclosed the material facts relevant to the issue of whether the Mareva injunction ought to be granted. The Mareva Injunction Order shall not be set aside.

[42] Firstly, in response generally to the position of the Defendants, it is important to note that the Defendants chose not to file evidence on these motions. While I appreciate that there was a quick turnaround between the making of the ex parte order and the hearing of these motions, the Defendants should have made some effort to file their own evidence to support their position and to contest any facts or evidence put forward by the Plaintiffs that they take issue with.

[43] Secondly, with respect to the issues raised by the Defendants with the affidavit evidence relied upon by the Plaintiffs, I do not find that same leads to a conclusion that the Plaintiffs did not make full and fair disclosure of the material facts on the ex parte motion for the following reasons:

a. the Defendants did not file any evidence to prove that the Plaintiff did not fully and fairly disclose material facts at the ex parte hearing;

b. while there are certainly other individuals that may have information relevant to the issues between the parties:

i. on a motion you do not need to file the same evidence from multiple individuals to prove a fact (in fact this is often discouraged);

ii. it is not clear to me from the submissions of the Defendant what evidence these other individuals would have in addition to what was provided by Mr. Toset, relevant to the issue of whether a Mareva order should be granted; and

iii. Mr. Toset gave evidence as to his experience with the First Nation and the fact that he has been involved in the Power Plant project for the last decade, making him an appropriate person to provide the evidence of the Plaintiff;

c. the evidence of Mr. Toset was uncontradicted and was not tested on cross-examination by the Defendants;

d. evidence based on information and belief is permitted on a motion pursuant to r. 39.01(4) of the Rules;

e. the material facts needed to meet the test for a Mareva order were provided by Mr. Toset directly in his affidavit evidence; and

f. while I understand that Mr. Toset used historical bank exchange rates to attempt to show the dissipation of the Funds while in the control of the Defendants, and he is not an accountant, I do not find that this was opinion evidence as the inability to properly account for the Funds is due to the failure of the Defendants to file evidence in response to the allegations that the Funds and the Segregated Account have been dissipated.

[44] Thirdly, the Plaintiffs attached the Agreement as an exhibit to the affidavit of Mr. Toset. While perhaps he did not highlight the ADR provisions in his Affidavit, the content of the Agreement, including the ADR provisions, was in evidence on the ex parte motion. I have no basis to find that any other agreements between the parties are relevant to the issues on these motions.

[45] Fourthly, the allegations that the Plaintiff did not provide evidence about Sagatay or its limited and general partners does not give rise to a finding that they failed to make full and fair disclosure of the material facts. The key here is "material facts". I am not convinced that this information is a material fact necessary to determine whether the assets of the Defendants, up to the value of what should have been in the Segregated Account ($17.55 million CDN), should be subject to a Mareva order pending a determination of this litigation. While perhaps more information about Sagatay and their role in the Power Plant project could have been provided in the Plaintiffs' evidence, the failure to do so is not materially relevant to whether the Mareva order should have been made on the ex parte motion.

[46] Fifthly, I have no transcript of the ex parte hearing before me. I do not know if the Plaintiffs advanced the position of the Defendants in response to the motion at the hearing. The Defendants simply make a bald assertion in argument that they did not. I have no evidence to support this assertion by the Defendants.

[47] Lastly, I have no evidence that there have been discussions or agreements with Canada about the Grant since the demand or repayment was made that should have been disclosed. If the Defendants have some knowledge of alleged agreements or discussions, they should have filed evidence on the motion to show that the Plaintiffs did not fully disclose all material facts at the ex parte motion. I cannot find that the Plaintiffs did not make full and fair disclosure pursuant to a bald assertion by the Defendants.

B. Are the Plaintiffs Entitled to a Mareva Injunction?

[48] A Mareva order is meant to preserve assets that are at risk of being dissipated, concealed, or transferred out of the jurisdiction so that the satisfaction of the future judgment is not frustrated: see PPI Management Inc. v. Zhou, 2023 ONSC 3603, at para. 65.

[49] In PPI Management, at para. 62, Kimmel J. set out the six factors that the court must consider when deciding whether to grant a Mareva injunction:

a. does the plaintiff has a strong prima facie case;

b. do the defendants have assets in the jurisdiction;

c. is there a serious risk of the assets being removed before the judgment or award is satisfied;

d. has the plaintiff given an undertaking as to damages;

e. will the moving party suffer irreparable harm if the injunction is not granted; and

f. does the balance of convenience favour the granting of the injunction.

[50] The party seeking the Mareva injunction has the onus to satisfy the test. The moving party can do so based on evidence from which reasonable inferences can be drawn. The defendants do not have to prove their innocence, but they do have to address the evidence and inferences that the plaintiff relies on to successfully oppose the motion: see PPI Management, at para. 67.

[51] While the Mareva Injunction Order was made on an ex parte basis, I must be satisfied now, de novo, that the Plaintiffs meet the test for a Mareva order if the Mareva Injunction Order is to continue.

[52] For the reasons that follow, I find that the Plaintiffs have met the test for a Mareva order and the Mareva Injunction Order ought to continue when the relevant factors are considered further to the evidence before me on these motions.

[53] Firstly, based on the evidence filed, the Plaintiffs have demonstrated that they have a strong prima facie claim. The Agreement is clear in that the Funds were to be kept in a segregated account, the Funds was to be used only for the purposes of securing financing and if the Defendants did not obtain the financing by the deadline noted, the Funds were to be returned. Based on the evidence filed, the financing was not obtained by the deadline and pursuant to the terms of the Agreement the Plaintiffs are entitled to a return of the Funds. The Defendants chose not to file any evidence on this motion to contest the evidence of the Plaintiffs. As such, I can only rely on the evidence of the Plaintiffs which establishes a strong prima facie case to the Funds.

[54] Secondly, it is clear from the evidence that the Defendants have assets in Ontario and the Plaintiffs have limited their request to a specific asset, being the Funds.

[55] Thirdly, there is a serious risk of the Funds being dissipated if the Mareva order is not made. An inference of a risk of dissipation is appropriate where evidence of transfers of misappropriated funds is available: see PPI Management, at para. 80.

[56] In this case, I have evidence that the Funds have been dissipated since being in the Segregated Account owned by the 141 Corporation. The Agreement is clear that the Segregated Account was to be used as collateral to secure financing. The Agreement does not permit the Defendants to expend money from the Segregated Account for any other purpose. The financing was not obtained, so the value of the Segregated Account should not have changed. The Defendants have chosen not to file evidence to dispute the evidence filed by the Plaintiffs to explain why the value of the Segregated Account decreased, or to provide an accounting of the Funds and the Segregated Account. As such, I am only left with evidence that shows that the Funds have been dissipated while in the control of the Defendants. Based on same, I conclude that without the Mareva order, the Funds are at risk of further dissipation.

[57] Fourthly, the Plaintiffs have given an undertaking to damages. The Defendants argue that the undertaking is essentially worthless as the court has no jurisdiction over First Nations and/or that the ability to collect on any judgment against a First Nation is next to impossible. The Defendants argue that therefore, the Plaintiffs cannot meet this part of the test. I disagree. The Court has jurisdiction over First Nations and can order First Nations to pay monies to individuals or entities. While I agree that collection against a First Nation is subject to its own rules and can be more difficult, the test is not whether the opposing party can collect on a judgment owing pursuant to an undertaking to damages. The requirement is that the party requesting the order give an undertaking, which has been done in this case. If I were to accept the position of the Defendants, it would mean that a First Nation would never be entitled to injunctive relief as it could not provide the necessary undertaking as to damages. I have not been provided with any law to suggest that this is the case.

[58] Fifthly, I find that the Plaintiffs will suffer irreparable harm if the Mareva order is not made. Irreparable harm is harm which either cannot be quantified in monetary terms, or which cannot be cured, usually because one party cannot collect damages from the other: see RJR-MacDonald Inc. v. Canada (Attorney General), [1994] 1 S.C.R. 311, at p. 341. The probability of irreparable harm increases as the probability of recovering damages decreases: see HTS Engineering Ltd. v. Marwah, 2019 ONSC 6351, at para. 200.

[59] The Defendants have requested that the Mareva Injunction Order be amended so as to permit them to pay for ordinary day to day living expenses and legal fees. The Mareva Injunction Order is worded so that the assets of the Defendants up to $17.55 million CDN are secured. This is the value of the Funds that should have been contained in the Segregated Account as per the terms of the Agreement. As such, the Defendants should have access to other assets, accounts, etc. to pay for their legal fees and ordinary day to day living expenses. The fact that they do not and are requesting access to the Funds to pay these expenses suggests that they have no other assets from which to satisfy any judgment that the Plaintiffs may obtain in this action. This leads to the conclusion that the Plaintiff will suffer irreparable harm if the Mareva order is not made as the Plaintiffs will have no ability to collect from the Defendants.

[60] Furthermore, it was the evidence of the Plaintiffs that the failure to repay the Grant to Canada could impact their ability to receive future funding from Canada for both the Power Plant project and other items. This would have a detrimental effect on the First Nation that could not be quantified in terms of monetary damages.

[61] Lastly, the balance of convenience favours the Plaintiffs. Based on the evidence before me, the Plaintiffs have established a strong prima facie case to the funds to which they want the Mareva order to apply. Furthermore, the Mareva order is only targeted against the Funds. The request is therefore, proportional and does not overreach. This should in no way have a negative impact on the Defendants as they were not to have access to the Funds or the Segregated Account for any purpose other than to securing financing for the Power Plant project. Furthermore, the Defendants have filed no evidence to support their argument that the balance of convenience favours them.

C. Should the Terms of the Mareva Injunction Order be Amended?

[62] It is important to note when considering a possible amendment, that the Mareva Injunction Order is limited to assets of the Defendants up to $17.55 million CDN. While I do not have evidence on this from the Defendants (only the submissions of their lawyer) it appears that more than the Segregated Account has been affected by the Mareva Injunction Order because the Segregated Account holds less than $17.55 million CDN. Therefore, RBC has frozen assets of all of the Defendants up to that value.

[63] The Defendants argue that the Mareva Injunction Order ought to be amended. Firstly, they assert that the Mareva order should only be made as against the 141 Corporation as it was the entity that received the Funds and owned the Segregated Account. Secondly, they assert that the Individual Defendants are not proper parties to the litigation and therefore, the Mareva order should not apply to their personal assets. Lastly, they argue that an exception should be made to allow the Defendants to pay their normal day to day living expenses and legal fees.

[64] The Plaintiffs assert that the terms of the Mareva Injunction Order should not be amended. Firstly, the Plaintiffs have no information as to why the Funds or the value of the Segregated Account decreased. While the Segregated Account was owned by the 141 Corporation, the Plaintiffs do not know if the Individual Defendants, as the controlling and directing minds of the 141 Corporation, directed funds from the Segregated Account to PPSI or any of the Individual Defendants in breach of the Agreement. The Defendants could have contradicted these claims by providing an accounting of the Funds and the Segregated Account on this motion, but they chose not to. Until such time as an accounting is provided for the Funds and the Segregated Account, all Defendants should be subject to the Mareva order in case funds have to be traced to PPSI and/or the Individual Defendants.

[65] Based on the evidence filed on the motions, the Mareva Injunction Order should not be amended for the reasons below.

[66] Firstly, the Defendants chose not to file any evidence to contradict the claims made against PPSI and the Individual Defendants. Until such time, the Individual Defendants and PPSI remain proper defendants to the litigation and should be subject to the Mareva order in case funds have to be traced to PPSI and/or the Individual Defendants.

[67] Secondly, the Defendants did not provide any evidence to explain the decreased value of the Funds or the Segregated Account. As such, the $17.55 million CDN that should be in the Segregated Account is what should be protected by the Mareva order.

[68] Lastly, the Defendants have provided no evidence as to how the Mareva Injunction Order is affecting the Individual Defendants and PPSI, or what expenses they need to pay. I cannot simply take the submissions of their lawyer as evidence on this point. I have no evidence on what other assets have been frozen and what expenses need to be paid and the value of same. I have no explanation from the Defendants as to why they have no other assets available to them to pay their ordinary living expenses and legal fees. Pursuant to the Agreement, the Funds were to be used only for the purpose of securing financing for the Power Plant project. It was not available to any of the Defendants to pay for expenses, let alone day to day living expenses or legal expenses.

D. Should the Plaintiff be Ordered to Pay Security for Costs?

[69] The Defendants argue that this court has no jurisdiction to order the Plaintiffs to pay costs if the Defendants are successful in defending this action because they are a First Nation. They further argue that the Holding Company is a shell corporation and neither Plaintiff has sufficient assets in Ontario to pay a cost award. Therefore, pursuant to r. 56 of the Rules, this court ought to order the Plaintiffs to pay security for costs in the amount of $200,000.00.

[70] Rule 56.01(1) of the Rules states as follows:

56.01 (1) The court, on motion by the defendant or respondent in a proceeding, may make such order for security for costs as is just where it appears that,

(a) the plaintiff or applicant is ordinarily resident outside Ontario;

(b) the plaintiff or applicant has another proceeding for the same relief pending in Ontario or elsewhere;

(c) the defendant or respondent has an order against the plaintiff or applicant for costs in the same or another proceeding that remain unpaid in whole or in part;

(d) the plaintiff or applicant is a corporation or a nominal plaintiff or applicant, and there is good reason to believe that the plaintiff or applicant has insufficient assets in Ontario to pay the costs of the defendant or respondent;

(e) there is good reason to believe that the action or application is frivolous and vexatious and that the plaintiff or applicant has insufficient assets in Ontario to pay the costs of the defendant or respondent; or

(f) a statute entitles the defendant or respondent to security for costs.

[71] I find that there is no basis on which the Plaintiffs should be ordered to pay security for costs for the reasons that follow.

[72] Firstly, the assertion that this court has no jurisdiction to order the First Nation to pay costs to the Defendants at the end of this proceeding is not supported by any legal principles or legislation. This Court can order First Nations to pay damage awards and cost awards. While I appreciate that enforcement rules are different with respect to First Nations, that is not a basis on which the court can rely to make an order for security for costs.

[73] Secondly, this relief is requested by the Defendants. The onus is on them to prove that one of the circumstances set out in r. 56.01(1) applies to the Plaintiffs in this instance. The only ones that could apply are subsections (d) and (e). In order to be successful on either of these grounds, the Defendants must prove that the Plaintiffs have insufficient assets in Ontario to pay a cost award.

[74] The Defendants assert that the Plaintiffs have not provided evidence to prove that they have sufficient assets in Ontario to pay the costs of the Defendants. This assertion is made in the face of the Defendant's decision not to file any evidence on this motion. The request for security for costs is made by the Defendants. The obligation to prove that such an order should be made is on them. This would include filing some evidence to establish that the Plaintiffs have insufficient assets in Ontario to pay a cost award. The Plaintiffs would then respond to that evidence by proving otherwise. The Plaintiffs are not obligated to disprove something that has not been proven by the moving party.

E. Should the Action be Stayed?

[75] The Defendants argue that this proceeding should be stayed and sent to alternative dispute resolution pursuant to the terms of the Agreement. Pursuant to Article 12 of the Agreement, the parties are to resolve their disputes by negotiation and then mediation, failing which they can pursue remedies in court.

[76] In response, the Plaintiffs argue that:

a. the Plaintiffs are not bound by the ADR provisions in the Agreement as the Agreement is null and void; and

b. if the Agreement is valid, they are exempt from proceeding to ADR since this is a claim that is amenable to summary judgment pursuant to s. 7(1) of the Arbitration Act.

[77] For the reasons that follow, I find that this proceeding shall not be stayed.

[78] Firstly, the Agreement does not include a requirement for the parties to arbitrate any disputes. As such, any provisions in the Arbitration Act, 1991, S.O. 1991, c. 17 requiring a stay of a proceeding has no application here.

[79] Secondly, I find that based on the evidence filed on these motions, the parties are not obligated to mediate prior to the commencement of this litigation because the Agreement (which contains the mediation clause) is null and void and therefore, no longer binds the parties. Article 2.1(iii) of the Agreement states:

"On or before July 15, 2023 ACHLIS will provide financing for the construction and operation of the CHP plant in the amount of CDN$60,000,000.00 (sixty million dollars) which shall be in the form of a line of credit, credit facility, or cash held in the Segregated Account subject to the terms of this agreement as set out in Article 3. If this result is not achieved on or before July 15, 2023, and this agreement has not been extended, this agreement shall be null and void and ACHLIS shall pay to the Company or as it directs the balance of the funds held in the Segregated Account and PPSI shall surrender its shares to the Company for $1 consideration. In this event the parties hereto shall not entitled to damages for breach of this contract and the parties shall be released from any obligations they directly or indirectly have to each other."

[80] In this instance, further to the evidence before me on these motions, the conditions by which the Agreement will be rendered null and void have been satisfied. More specifically, Achlis (otherwise known as the 141 Corporation) did not provide financing for the Power Plant project in the amount of $60 million dollars by July 15, 2023, or to date, and there is no evidence that the Agreement has been extended by the parties. While there could be some suggestion that it was extended by the conduct of the parties after July 15, 2023, that can no longer be the case as of April 14, 2025, when the First Nation first requested repayment of the remaining amount of the Funds from the Defendants.

Conclusion

[81] I make the following orders:

a. the Defendants' motion is dismissed; and

b. the Mareva Injunction Order shall continue.

[82] I trust that counsel will be able to work out the wording of the order to be issued. If they are unable to agree, the parties can schedule a brief thirty-minute Case Conference before me by contacting the Trial Co-Ordinator.

Costs

[83] If the parties cannot agree as to the costs of these motions, they can deliver written cost submissions of not more than five pages plus a Costs Outline as follows:

a. the Plaintiffs within twenty days of the date of this decision;

b. the Defendants, within ten days of receipt of the Plaintiffs' submissions; and

c. reply submissions by the Plaintiffs, if any, within five days of receipt of the Defendants' submissions with same being limited to two pages.

The Hon. Madam Justice R.A. Lepere

Released: August 27, 2025