Court File and Parties

Court File No.: CV-25-00742471-00CL Date: 2025-10-06 Superior Court of Justice – Ontario (Commercial List)

Re: Realtrium Holdings Pickering Inc. Plaintiff

And: Courtney Wallis Simpson, also known as Lynn Simpson, Wayne Simpson, also known as Kenneth Wayne Simpson and Wynn Realty Corporation Defendants

And: 5016652 Ontario Inc., 9615644 Canada Ltd., Chong Zhou, 2526154 Ontario Inc., Baldwin Airport Management Inc., Caliber Developments Inc., and P. Campagna Investments Limited Intervenors

Application Under Section 101 of the Courts of Justice Act, R.S.O 1990, c. C.43, as Amended

Before: Kimmel J.

Counsel:

• Steven J. Weisz, Dilina Lallani & Robert Sottile, for the Receiver, Moving Party
• Jeffrey Klein & Joseph Juda, for Non-Party, 3303128 Canada Inc. (Insurance Coverholder)
• R. Christopher M. Belsito, for Intervenor, P. Campagna Investments Ltd.
• Harjaap Sahota, for Intervenor, 5016652 Ontario Inc.

Heard: July 22, 2025

Endorsement (Receiver's Distribution and Discharge Motion)

The Motion

[1] Grant Thornton Limited was appointed as receiver (the "Receiver" or "GTL"), with security, of all of the assets, undertakings and properties of the Wynn Realty Corporation (the "Company" or "Wynn"), including all proceeds thereof (the "Property") by order dated October 25, 2023 (the "Appointment Order"). The Receiver was appointed under s. 101 of the Courts of Justice Act, R.S.O. 1990, c. C.43.

[2] The Receiver was appointed following the discovery of a real estate fraud perpetrated by the personal defendants, Courtney Simpson and Wayne Simpson (the "Simpsons"), perpetrated through the trust account of the Company.

[3] The Receiver is seeking:

a. Approval of: i. its first report dated May 9, 2025 (the "First Report"), including the actions and activities of the Receiver as described in it, and of its fees and the fees of its counsel (Cozen O'Connor LLP's: "Cozen O'Connor"). This fee approval includes a Fee Accrual (as defined in the First Report) to complete the administration of the Receivership Proceedings, and of its final statement of receipts from October 25, 2023 to May 7, 2025 appended to the First Report (the "Final R&D").

ii. its proposed distribution of the monies it holds (the "Proposed Distribution"); and

b. If approved, an order for its release and discharge.

[4] The Intervenors support the Receiver's Proposed Distribution and the other requested relief. The defendants did not appear or take any position, nor did the plaintiff, although the plaintiff's position is aligned with that of the Receiver and the Intervenors.

[5] The contentious aspect of this motion is the Receiver's request for the approval of its Proposed Distribution. The contention arises because:

a. the Receiver is only proposing to distribute the funds it is holding (which are expected to be the only recoveries in this receivership) to certain creditors/claimants who initiated the appointment of the Receiver (namely the plaintiff and the Intervenors); and

b. the Proposed Distribution does not account for any insurance proceeds that these creditors/claimants have already received in respect of their claims from the Company's Insurer, nor does the Proposed Distribution include any distributions in respect of subrogated or assigned claims of the Insurer for any amounts it has paid out to the plaintiff, the Intervenors or to the many other former clients of the defendants who were victims of the fraud (the "Consumers").

[6] The Real Estate Counsel of Ontario ("RECO") mandates that the real estate brokers that it supervises and manages in Ontario must have insurance policies to protect Consumers with coverage (up to a maximum of $100,000 per claim) that is available to individuals or companies who paid deposits to real estate brokers and have been unable to get their deposits back due to fraud, misrepresentation or other misconduct on the part of the broker or its registrants. These Insurance Policies are underwritten by certain Underwriters at Lloyds/Trisura Guarantee Insurance Company ("the Insurer") through its Coverholder 3303128 Canada Inc. T/A Alternative Risk Services (the "Coverholder"). The Coverholder is advancing the interests and position of the Insurer. The Coverholder and the Insurer are referred to interchangeably throughout this endorsement, except where the context requires a distinction between them.

[7] The Coverholder (on behalf of the Insurer) objects to the Proposed Distribution and seeks an order that directs a distribution by the Receiver that includes a pro rata distribution to the Insurer for subrogated and/or assigned claims in respect of amounts it has paid to Consumers.

[8] Capitalized terms not otherwise defined herein have the meanings ascribed to them in the Receiver's factum for this motion.

Summary of Outcome

[9] For the reasons that follow, the court has directed that the Proposed Distribution be revised to provide for equitable distributions to be made to all known Consumers who made claims under the Insurance Policy in respect of their deposits.

[10] While the court has not accepted the Coverholder's claim on behalf of the Insurer for the inclusion in the Proposed Distribution of the Insurer's subrogated and/or assigned claims in respect of amounts it has paid to Consumers, the assertion of this claim has brought to light that the Proposed Distribution improperly gives effect to a private agreement or understanding between the plaintiff and the Intervenors that gives them preferential treatment over other similarly situated creditors (Consumers). The court has directed that a new Proposed Distribution be prepared by the Receiver that contemplates the participation of all known Consumers.

Background

[11] Wynn was a real estate brokerage registered under the Real Estate Business and Brokers Act, 2002, S.O. 2002, c. 30, Sch. C as it existed in June 2021 ("REBBA"), to trade in real estate as a brokerage in the Province of Ontario. The broker of record was Wayne Simpson.

[12] All registered salespersons, brokers and sole proprietors are required to participate in RECO's insurance program. RECO's insurance program includes Consumer Deposit Insurance, Commission Protection Insurance and Errors and Omissions Insurance. Consumer Deposit Insurance protects consumers against the loss of deposits caused by real estate broker fraud, misappropriation of funds or insolvency.

[13] As the broker of record, Wayne Simpson was responsible for proper maintenance and operation of the trust accounts of the brokerage of Wynn. He, together with his wife Courtney Simpson, perpetrated a real estate fraud that was facilitated through the trust accounts of Wynn.

[14] Prior to the Receivership Order, on or about June 24, 2021, the plaintiff obtained an order for a Mareva Injunction against the Simpsons and the Company and was granted leave to register a Certificate of Pending Litigation ("CPL") against the Simpsons' property municipally known as 26 Wyndance Way, Uxbridge, Ontario ("Wyndance"), which was in the process of being sold.

[15] The sale of Wyndance closed under the supervision of the court and the only secured creditor on Wyndance was paid out on closing. The CPL was lifted to allow for the closing and the residual proceeds of sale, totaling approximately $800,000.00, to be paid into court to the credit of the within Realtrium action.

[16] Prior to the sale of the Simpsons' home, the Insurer registered a Caution against title to Wyndance (the "Caution"). The Caution was vacated pursuant to an order of this court dated July 14, 2021, to allow for the sale of Wyndance to close.

[17] The plaintiff and the Intervenors brought their motion to appoint the Receiver in July of 2023. The Appointment Order was granted in October of 2023 in respect of the Company, Wynn.

[18] Paragraph 2 of the Appointment Order orders that: The monies held in court to the credit of this action "shall be turned over to the control of the Receiver, and the said monies shall form part of the Property under the Receiver's control".

[19] The Property is defined in the Appointment Order to be: "all of the assets, undertaking and properties of the Debtor [the Company, Wynn] acquired for, or used in relation to a business carried on by the Debtor, including all proceeds thereof".

[20] In addition to appointing the Receiver to take possession and control of the Wyndance sale proceeds that had been paid into court, the Intervenors and the plaintiff included in the Receiver's original mandate the authority to trace, investigate and/or recover any additional sums and assets that were misappropriated from the Wynn trust account, or which may be traced back to the various victims or may otherwise be an asset of the Simpsons or Wynn.

[21] After being appointed, the Receiver was advised by Courtney Simpson that, apart from the proceeds from the sale of Wyndance, the Company and the Simpsons had no other assets. The Receiver was not provided with any information regarding the books and records of the Company or names of creditors of the Company. The Receiver has not been funded to conduct any further investigations or tracing. No further recoveries are expected in these proceedings beyond the amount paid into court and now held by the Receiver.

[22] The Intervenors say that they had an understanding with the plaintiff that the funds paid into court to the credit of this action would be transferred to be held by the Receiver and that those funds would eventually be distributed pro rata by the Receiver among the plaintiff and Intervenors.

[23] The Receiver reports that it was advised of the understanding between the plaintiff and the Intervenors after its appointment. Their understanding was predicated on their belief that the Wyndance sale proceeds were only preserved because of their efforts. The Receiver's now Proposed Distribution is only in respect of what remains of the sale proceeds after payment of the fees and disbursements of the Receiver and its counsel.

[24] The net amount currently estimated to be available for the Proposed Distribution is $633,826. The Intervenors and the plaintiff have agreed that the costs of counsel to two of the Intervenors as it relates to obtaining the Receivership Order should be paid in priority prior to the Proposed Distributions. This agreed reimbursement of costs has been reflected on the Final R&D attached to the Receiver's First Report. The various professional fees and disbursement deductions have not been challenged by any stakeholder and are not opposed.

[25] There has been no claims process, but the receivership has been a matter of public record since 2023 and the only parties that have come forward are the plaintiff, the Intervenors and the Coverholder (in respect of claims the Insurer has paid out to Consumers), all asserting claims in respect of unreturned deposits. Neither the Receiver nor the Coverholder are recommending that any amount be held back on account of future claims not yet asserted, given the passage of time. The Receiver points out that there is no funding for a formal claims process and it has no reason to believe at this point that a claims process will yield any claims that have not already been made by Consumers under the Insurance Policy.

[26] For the purposes of understanding the significance of the competing claims in the context of this motion, the total amount of the claims asserted by the plaintiff and Intervenors is $1.9 million and the total amount of the claims asserted by the Coverholder (on behalf of the Insurer) is $1.625 million. The total amount paid by the insurer to Consumers as of the date of the affidavit filed in support of its position was $1,525,000, with a further $100,000 that was expected to be paid on May 30, 2025, to the plaintiff, Realtrium, on account of its claim under the Insurance Policy. In addition, the insurer is still in receipt of several unpaid claims and has reserved the sum of $950,000 for those claims.

[27] The above amounts are not disputed for purposes of this motion, although the Receiver says it would have to verify the amount that the Insurer says it has paid out to Consumers if the court directs that the corresponding subrogated and/or assigned claims be included in the amounts to be distributed.

[28] The parties also all agree that the court should not decide today whether credit should be given in any pro rata calculations for amounts any particular claimant has received from the Insurer. The participating parties advised the court that they would like the court to either approve or not approve the Proposed Distribution without considering whether this credit should be applied and, if so, without determining how to calculate and adjust for it under any particular scenario. It was suggested that once it has been determined who will participate in the Proposed Distribution it could be left to the Receiver to make a further recommendation about whether the participating parties should account for amounts received under the Insurance Policy or not. The court will await the Receiver's further recommendation in this regard.

Issues to be Decided

[29] The issues to be determined are set out by the Receiver in its factum as follows:

a. Should the Court approve the Proposed Distribution?

b. Should the Court grant the order approving the Receiver's First Report, activities, fees and disbursements?

c. Should the Court approve the discharge and release of GTL as Receiver?

Analysis

[30] The focus of this analysis will be on the first question of whether the Proposed Distribution should be approved. If it is, the remaining two aspects of the relief sought are relatively straightforward, are not opposed and should flow from the approved distribution, there being nothing further for the Receiver to do after the funds it is holding have been distributed. If the Proposed Distribution is not approved then it will be premature to decide the remaining two aspects of the relief sought.

The Proposed Distribution

[31] As noted earlier in this endorsement, the only contentious issue is about whether the Coverholder (Insurer) has a valid and legitimate claim to share in the distribution of the funds held by the Receiver. The jurisdiction and authority of the court to approve distributions by a receiver is accepted by all participating parties. There is longstanding authority for this court granting such orders, dating back many years: see for example, Re Windsor Machine & Stamping Limited, at paras. 8, 13.

[32] The Proposed Distribution raises a number of issues that the court must consider, namely:

a. Are the funds held by the Receiver subject to a side agreement or understanding between the plaintiff and the Intervenors?

b. Can the Insurer assert a subrogated claim?

c. Can the Insurer assert a claim under the Assignment of Interests that it has received from Consumers?

d. Who should participate in the Proposed Distribution?

A. The Side Agreement Between the Plaintiff and the Intervenors Regarding the Funds to be Distributed

[33] The Receiver's stated position in its factum is that:

Although the Receivership Order states: "... that the monies currently being held by the Accountant of the Superior Court of Justice ... shall be turned over to the control of the Receiver, and the said monies shall form part of the Property under the Receiver's control", the Receiver believes that the intent of this part of the Receivership Order was to be a protective measure over such funds and not so as to be considered Property for the general benefit of the Company's creditors.

[34] The Receiver cites as the primary grounds for its belief that the funds paid out of court to the Receiver when the Appointment Order was made do not form part of the Property of the Company for the general benefit of the Company's creditors that:

a. The understanding between counsel for the plaintiff and the Intervenors that the funds were to be distributed pro rata among the plaintiff and Intervenors herein subsequent to the appointment of a Receiver, and their intention that the proceedings addressed in the July 21, 2023 Motion Record (seeking the appointment of the Receiver) was for such funds to be for the sole benefit of the Plaintiff and Intervenors, all of which the Receiver was told about after its appointment.

b. The source of the funds received from the Accountant of the Superior Court of Justice was from the sale of the personal residence of the Simpsons, as a result of the breach of trust action initiated by the plaintiff that the Intervenors were granted standing to participate in.

[35] Neither the Insurer nor its Coverholder were privy or party to the alleged agreement or understanding between the plaintiff and the Intervenors at the time it was made, when the monies were paid into court to the credit of this action. At the time, there was a Mareva injunction and a CPL in place. The CPL had to be lifted for the sale of the Simpson's home to be completed.

[36] At the time of the sale of Wyndance, the Insurer had a Caution registered on title representing claims it was asserting against the Simpsons' personal property (matrimonial home) that had to be removed in order to enable the transaction to close. In other words, the Insurer had asserted a claim against the Simpsons' home outside of this action.

[37] I find it troubling that the court is being asked to consider and give effect to a side agreement or understanding that was not contemporaneously documented or recorded and that is in direct conflict with paragraph 2 of the Appointment Order which expressly states that: The monies held in court to the credit of this action "shall be turned over to the control of the Receiver, and the said monies shall form part of the Property under the Receiver's control".

[38] The Receiver was appointed over the assets of Wynn. Even though Wyndance was the Simpsons' residence with title held in the name of Wayne Simpson, the net proceeds from the sale of that property were paid into court and later ordered to form part of the Debtor's Property that was placed in the care and control of the Receiver, without any qualification or exception. I am not prepared to look behind that order. Whatever the agreement or understanding was between the plaintiff and the Intervenors in connection with the appointment of the Receiver, it does not override the plain and clear wording of paragraph 2 of the Appointment Order.

[39] Assets that are affected by a Mareva order are not only frozen to satisfy the claims of the creditor who obtains the order. While the creditor who secures the assets may be entitled to have their legal fees reimbursed in priority to other claims (as was ordered in this case), the priority of their claims is not enhanced over other similarly situated creditors simply because they obtained the Mareva order. The continuity of claims by all Consumers for recovery of their deposits was preserved against the frozen funds when the Mareva order was obtained in respect of the sale proceeds of the Simpson's house. These frozen funds were transferred to the Receiver and ordered to be treated as part of the Debtor's Property under the Appointment Order. In the circumstances of this case, the same group of creditors, namely the Consumers who are the beneficiaries of the Consumer Deposit Extension under Coverage C of the Insurance Policy (including, but not limited to, the plaintiff and the Intervenors), had claims on equal footing with the plaintiff and the Intervenors when the Mareva order was obtained, as they do now with their claims against Wynn, the Debtor.

[40] The alleged agreement or understanding between the plaintiff and the Intervenors is not determinative of the question of whether the Insurer/its Coverholder (or any other Consumer) has a valid and legitimate claim to share in the Proposed Distribution. The claim asserted by the Coverholder on behalf of the Insurer to participate in the Proposed Distribution must be independently evaluated and assessed without regard to any side agreement between the plaintiff and the Intervenors.

[41] The claim to participate in the Proposed Distribution asserted by the Coverholder is predicated on two legal constructs: a claimed right of subrogation under the Insurance Policy, and contractual assignments of claims received from certain Consumers whose claims have been paid by the Insurer.

B. The Subrogation Claim

[42] It is the Receiver's position that the Simpsons and Wynn are Insureds under the Insurance Policy. The Receiver (and the Intervenors) rely upon legal authority that they say prohibits an insurer (and, in this case, its Coverholder) from suing its own Insureds to recover indemnities paid by the Insurer under the Insurance Policy. The rationale for this is that "[t]he rule recognizes that the insurer has contracted to assume the risk for which insurance was purchased, and to take that risk away from the insured. It would negate the purpose of insurance if the insurer could then sue an insured that was to be protected from risk by the policy": see Mizen Holdings Corporation v. Toronto (City) et al., 2023 ONSC 1882, 34 C.C.L.I. (6th) 113, at para. 103, citing Commonwealth Construction Co Ltd. v. Imperial Oil Ltd. et al., [1978] 1 S.C.R. 317; Rochon v. Rochon, 2015 ONCA 746, 341 O.A.C. 211, at paras. 73-74; and Scaffidi-Argentina et al. v. Tega Homes Developments et al., 2020 ONSC 6656, 8 C.C.L.I. (6th) 223, at paras. 28-47, aff'd Scaffidi-Argentina v. Tega Homes Developments, 2021 ONCA 738, 23 C.C.L.I. (6th) 35.

[43] The Coverholder seeks to get around this general prohibition by arguing that the rule has either been excluded or exempted under a proper interpretation of the Insurance Policy, or that a "fraud" exception should be implied or created by this court based on the jurisprudence that has developed in cases involving negligent (but not fraudulent or wilful) acts of the Insured.

(i) The Insurance Policy

[44] The starting point of this analysis is to examine the Insurance Policy and who the "Insureds" are under Coverage C of the Insurance Policy that covers the claims of the Consumers (the claimants/creditors who lost their deposits as a result of the fraud perpetrated by the Simpsons through Wynn).

[45] The Insurance Policy, which is a contract, must be interpreted by giving effect to its clear language and with regard to the contract as a whole, with ambiguities being resolved in a manner that is consistent with the objectively reasonable expectations of the parties that are supported by the language of the policy, and with the contra proferentam rule only being employed to construe the policy against the Insurer when an ambiguity in the Insurance Policy cannot be resolved through the application of the usual rules of contract interpretation: see Ledcor Construction Ltd. v. Northbridge Indemnity Insurance Co., 2016 SCC 37, [2016] 2 S.C.R. 23, at paras. 49-51, citing Progressive Homes Ltd. v. Lombard General Insurance Co. of Canada, 2010 SCC 33, [2010] 2 S.C.R. 245, at paras. 22-24; see also Scott v. Wawanesa Mutual Insurance Co., [1989] 1 S.C.R. 1445.

[46] All registered salespersons, brokers and sole proprietors are required to participate in the RECO insurance program. RECO's insurance program includes Consumer Deposit Insurance, Commission Protection Insurance and Errors and Omissions Insurance. Consumer Deposit Insurance protects Consumers against the loss of deposits caused by real estate broker fraud, misappropriation of funds or insolvency, such as what took place here. This is provided in the Consumer Deposit Extension under Coverage C of the Policy (the "Consumer Extension"). The Consumer Extension under Coverage C is what covered the claims of Consumers that have been paid by the Insurer.

[47] "Insured" and "Occurrence" are not defined in the Consumer Extension, but it states that definitions in the previous extensions of coverages, A and B, apply to the Consumer Extension except for specific definitions enumerated in the Consumer Extension. Coverage B expressly defines "Insured" for Coverages B and C as: (i) The Named Insured, (ii) An Administrative Employee; or (iii) A Registrant.

[48] A "Registrant" is defined in Coverage A as a "person currently or previously registered by the Named Insured [which is RECO] ... and can be a Salesperson, Broker or Brokerage". These terms are cross-referenced to their statutory definitions in REBBA. These definitions determine that the Company Wynn was a Brokerage and Wayne Simpson was a Broker, and both are therefore "Registrants".

[49] Courtney Simpson was not a Registrant at the relevant time. No party suggests that she was a registered real estate agent during the events in question. Even though her real estate license had been revoked in 2006, she apparently held herself out as one. Nor has it been suggested that she comes within the definition of an Administrative Employee. She was not an "Insured" under the Insurance Policy. It is alleged that she participated, as a co-conspirator or tortfeasor, with Wynn and Wayne Simpson in the wrongful conduct that triggered the coverage under the Insurance Policy.

[50] If there was a fund of money that was "hers" then the rule against an Insurer suing its insured would not apply; however, there is no such fund. The monies that are the subject of the Proposed Distribution are, by virtue of paragraph 2 of the Appointment Order, the Property of Wynn (the Debtor Company). As indicated earlier in this endorsement, the court is not prepared to look behind paragraph 2 of the Appointment Order to treat the funds that are the subject of the Proposed Distribution as being the property of anyone other than the Company/Debtor, Wynn. Thus, nothing in particular turns on the finding that Courtney Simpson is not an Insured under the Insurance Policy.

[51] The analysis proceeds on the basis that Wynn is an Insured.

[52] An "Occurrence", for which a Registrant is insured under the Consumer Extension, is defined in Coverage B as follows:

"Occurrence" means:

(a) insolvency of a Registrant; or

(b) all acts of theft, misappropriation or wrongful conversion combined, committed directly or indirectly by a Registrant or present or former employee, director, officer or manager of a Registrant of moneys or other property entrusted to, or received by, the Registrant in the Registrant's Professional Capacity. [Emphasis added.]

[53] The Insurance Policy provides that the Insurer is responsible: "To pay on behalf of the Insured the amount of any Claim for Loss sustained by a Claimant in a trade in the Province of Ontario in real estate arising out of an Occurrence discovered during the Policy Period. Payment of any Claim shall only apply for the benefit of a Claimant."

[54] The Coverholder argues that only a Consumer "Claimant" can receive a payment under the Consumer Extension, and the Consumer "Claimant is the only party that should benefit from this coverage, consistent with the provision that the "payment of any Claim shall only apply for the benefit of a Claimant" (e.g. not a dishonest Registrant). On this interpretation, the Coverholder argues that the definition of an "Insured" under the Consumer Extension for Deposit Insurance should be read not to include a dishonest Registrant, such as Wynn or Wayne Simpson.

[55] However, this interpretation ignores the distinction between a beneficiary and an insured under this policy. Further, there is no such express exception provided for in the Insurance Policy and it is inconsistent with the plain and unambiguous wording of the Insurance Policy: An "Occurrence" for which an Insured, which includes a "Registrant", is covered includes "acts of theft, misappropriation or wrongful conversion combined, committed directly or indirectly by a Registrant". The wording of the Consumer Extension provides coverage to Registrants (who are Insureds) for their liability to Consumers for those very acts. The Insurance Policy skips the step of requiring the Claimant to sue the Registrant (Insured) and the Insured to claim under the Insurance Policy to recover amounts paid to the Claimants, and requires the payment of the policy limit for claims under this Consumer Extension to be paid directly to the benefit of the Claimant. These express terms of the Policy are unambiguous and effect should be given to this clear language.

[56] Wynn (and Wayne Simpson) are Registrants who are implicated in the dishonest scheme that resulted in payments by the Insurer to Claimants under the Insurance Policy. They are Insureds whose own liability to the Claimants is being paid for by the Insurer up to the claim cap.

[57] This interpretation applies the definition of "Registrant" in a manner that is consistent and harmonious with other terms of the Policy, such as the definition of "Occurrence", for which a Registrant is insured under the Policy. To hold otherwise results in the commercially absurd result where a Registrant is not considered an Insured under the Policy for acts that the policy specifically provides insurance coverage for under the definition of Occurrence.

(ii) Rights of Subrogation and Recovery Under the Policy

[58] The Insurance Policy contains a right of subrogation and recovery for the Insurer, as follows:

5. Subrogation and Recovery

In the event of any payment under this POLICY, the Insurer shall be subrogated to all rights of recovery against any person and the Insured shall execute and deliver instruments and papers and render assistance to secure such rights subject to the Named Insured's duties and responsibilities under legislation related to real estate or the Named Insured in the Province of Ontario, including the Real Estate and Business Brokers Act, 2002 and the regulations thereunder as from time to time amended, and every statute and regulation that may be substituted therefor or any successor legislation and/or the Administrative Agreement between the Named Insured and the Province of Ontario and/or the by-laws of the Named Insured and/or any applicable privacy laws.

Any recoveries, whether effected by the Insurer or by the Named Insured, shall be applied net of the expense of such recovery to the Insurer as reimbursement of amounts paid in settlement of any Claim.

It is expressly agreed between the Insured and the Insurer that the Insurer shall be subrogated to all of the Insured's rights of recovery, including the value of any dishonest Registrant's interest in any partnership as determined by closing the said partnership's books as of the date of the discovery of the Occurrence by the Named Insured, including any amounts owing to such dishonest Registrant by the said partnership but in no event for more than the amount of coverage applicable to the INSURING AGREEMENTS of this POLICY. The Insurer expressly acknowledges that it shall waive all rights of recovery against any Registrant of the partnership in question who was neither an author, accomplice nor acting in collusion with the dishonest Registrant in respect of any Occurrence resulting in any Claim paid under this POLICY. [Emphasis added.]

[59] The Coverholder argues that this provision that: "the Insurer shall be subrogated to all rights of recovery against any person" is an express carve out from the common law prohibition against an insurer exercising a right of subrogation against an insured. I disagree. This provision goes on to address the requirement for the Insured "to execute and deliver instruments and papers and render assistance to secure such rights" and is, when read in its proper context and harmoniously with the other provisions of the Insurance Policy, reasonably and objectively interpreted as addressing the ability of the Insurer to pursue subrogated claims in the name of the Insured against third parties. It does not clearly and ambiguously allow for subrogated claims against an Insured for an insured loss, as it would need to do clearly and unambiguously in order to override the common law prohibition.

[60] This interpretation is in keeping with the long-held principle that an insurer's right of subrogation against a third party can be in no better position than its insured: see Matt (Guardian of) v. Barber (2002), 216 DLR (4th) 574, 162 O.A.C. 34, at para. 25. This is because an insurer's right of action is derivative in nature and in exercising a right of subrogation, "the insurer is advancing only the cause of action that the insured 'would otherwise have against the party responsible for causing the loss'": see Tuffnail v. Meekes, 2020 ONCA 340, 449 D.L.R. (4th) 478, at para. 37.

[61] For this argument to succeed, it would require that the Insured have legally enforceable rights or causes of action against a third-party tortfeasor or co-conspirator who is not an Insured. The Coverholder attempted to make this argument through a claim that Wynn (the Insured) might have against Courtney Simpson (not an Insured, but a co-conspirator). This argument runs up against the court's earlier finding that the funds that are the subject of the Proposed Distribution are, by virtue of paragraph 2 of the Appointment Order, the Property of Wynn, the Debtor, and not the property of Courtney Simpson, as would have to be the case for there to be even the prospect of a subrogated claim by the Insurer against her.

[62] The only caveat or exception to the common law rule and prohibition that the subrogation and recovery provision of the Insurance Policy creates is an allowance that "the Insurer shall be subrogated to all of the Insured's rights of recovery, including the value of any dishonest Registrant's interest in any partnership as determined by closing the said partnership's books as of the date of the discovery of the Occurrence by the Named Insured, including any amounts owing to such dishonest Registrant by the said partnership" (emphasis added). This exception is specific and narrow. It only provides for subrogation rights to recover "the value of any dishonest Registrant's interest in any partnership as determined by closing the said partnerships' books as of the date of the discovery of the Occurrence". It does not and should not be read to extend to a broader general exemption allowing for subrogated claims by the Insurer against the Insured because the Insured in this case is a "dishonest Registrant".

[63] The earlier interpretation of the Insurance Policy, which takes into account the definitions of Insured and Occurrence, has established that a Registrant is not excluded from Coverage C simply because they are a "dishonest Registrant" that committed a fraud. Those acts are expressly covered. This Insurance Policy has created a specific and express but limited exception for the possibility of a subrogated claim by the Insurer against a partnership interest of an Insured who is a "dishonest Registrant". The express exemption does not go farther than that. It does not override the common law prohibition nor create a broader exemption for "dishonest Registrants".

(iii) The Proposed Fraud Exception

[64] The Coverholder makes the further argument that, even if the Insurance Policy does not expressly override the common law prohibition, this court should create a fraud exception to that rule in the case of a "dishonest Registrant". The Coverholder acknowledges that it cannot provide any precedent for a court having done so up until now. The Coverholder contends that this is a logical extension from earlier cases that recognized the common law rule and in which the prospect that the rule might not apply in cases of arson or fraud (or other deliberate cause) was alluded to in passing reference (obiter): see Scaffidi-Argentina, at para. 28; Condominium Corporation No. 9813678 v. Statesman Corporation, 2007 ABCA 216, 409 A.R. 152, at para. 9.

[65] In this case, the fraud exception would arguably apply to both Registrants Wayne Simpson and Wynn. The Debtor Wynn was implicated in the fraud. It is an Insured. Its bank (trust) accounts received Consumers' deposits that the Consumer Extension has been called upon to repay. It was Wynn's trust account through which the funds were misappropriated. Wynn was a small, closely-held entity. Wayne Simpson was the Broker of Record and controlling mind of Wynn. Both Wynn and Wayne Simpson were suspended by RECO. Furthermore, Wynn is implicated in the fraud allegations in the actions brought by the various Consumers, and Wynn would have liability to the Consumers in these actions for civil fraud, assuming the allegations are proven. Wynn is the relevant Insured to consider since it is Wynn's Property that is the subject of the Proposed Distribution.

[66] According to the Coverholder, the allowance for a "fraud exception" is logical since the policy for the rule should not apply if the insured has committed a fraud or other wrongful acts (and is thus a "dishonest Registrant").

[67] The Alberta Court of Appeal explained in Statesman, at paras. 26-28, that:

[26] …an important reason not to allow an insurer to sue its insured, is that such a suit does not fulfil the aims of subrogation.

[27] The Supreme Court of Canada held that avoiding overpayment of the insured is the basis for subrogation. See Ledingham v. Hospital Services Commission, [1975] 1 S.C.R. 332, 46 D.L.R. (3d) 699…

[28] The fact that subrogation prevents over-indemnity and hence is a remedy to prevent unjust enrichment, does not make subrogation vague or discretionary. It operates on well-settled principles in defined circumstances: Goff & Jones, op. cit. supra, at § 3-001.

[68] Just as in this case, in Statesman, the Alberta Court of Appeal was asked, but declined, to create new law in a fraud exception to the rule against subrogated claims against insureds, even though it recognized, at paragraph 25, that: "the traditional rule barring an insurer from suing its own insured occasionally yields unpredictable results. But an insurer can negotiate exceptions to coverage or to subrogation waiver clauses before it issues a policy." Absent a contractually negotiated exception in that case, the Alberta Court of Appeal was not prepared to create new law and a fraud exception, and neither am I.

[69] In considering whether a few rare exceptions should be established for allowing an insurer to sue its insured, the Alberta Court of Appeal observed in Statesman, at para. 38, that: "Even cases without any actual fault or special circumstances would at least involve lengthy investigation to assure the insurer that neither existed. The cure would be worse than the disease".

[70] The Alberta Court of Appeal continued, at para. 49:

The most basic policy reason to bar subrogation against one of the insured is that the insurer has contracted to take onto itself the very risk, taking it from the very insured. The policy of insurance is one of indemnity, and so the co-insured should be indemnified against all his losses, including the subrogated claim…Either there is coverage for this loss or there is not. If not, there should be no initial payout at all and nothing to subrogate to. If there is coverage, then the risk has been taken by the insurance contract off the insured and onto the insurer. So subrogation is backwards.

[71] The Alberta Court of Appeal further observed, at paragraph 66: "It is quite arguable that Supreme Court of Canada decisions barring subrogation bind here, and that the Court of Appeal is not free to adopt the suggested exception, especially as it does not reflect the Supreme Court of Canada's rationale for subrogation (avoiding double payment)".

[72] Wynn is a co-conspirator and its Property is now deemed to include the sale proceeds from Wyndance, because that is what the Appointment Order says and no one challenged or objected to it at the time, nor has sought to set it aside since. That is part of the Property of the Insured. So anyone claiming entitlement to it must have a claim against the Insured Wynn.

[73] The Insurer's insistence that the Consumers (including the Intervenors) assign their interest in their insured deposits and any other claims against the Insured before advancing funds under the Consumer Extension is consistent with it holding the belief and understanding that it could not pursue subrogated claims against its own Insured. Instead, it tried to use the Assignments to get around that rule and prohibition.

C. The Assignment Claim

[74] The Insurer has received Assignments of Interest ("Assignments") from certain Consumers ("assignors") of "all of their [the assignors] right, title and interest in the deposit, to the extent of $100,000.00 and in any action, cause of action, contract, claim or demand for damages which the ASSIGNORS have against any other person or corporation or legal entity, in respect of the loss of deposit(s) paid to WYNN REALTY CORPORATION". [Emphasis added.] The Assignments are not specific to claims that the Consumers have against the Insured, but the broad assignment language appears to include claims against anyone and everyone, and does not exclude claims against the Insured.

[75] Some of these Assignments were granted by the Consumers (including certain of the Intervenors) on a without prejudice basis pending the court's determination of whether the Insurer is found to be entitled to receive payment from the proceeds held by the Receiver. However, for the most part, the Assignments were provided without any restrictions.

[76] The primary argument advanced by the Receiver against the court giving effect to the Assignments is that the court should not permit this contractual construct to be used to avoid the rule or prohibition against an insurer suing its insured through subrogation. The Receiver recognizes in its submissions that pursuing a claim through the Assignments in the present case is not precisely the same as the situation described in Mizen and Rochon. It argues, however, that the ultimate effect is the same. The Insurer is seeking to use the Assignments to recover monies it paid under the Insurance Policy from funds now held by the Receiver and forming part of the Property of one of the Insureds (Wynn). If the Insurer had brought these proceedings against Wynn by way of subrogated claim, the proceedings would be dismissed.

[77] There is no case that either side directed the court to, that addresses this issue of whether an Assignment can be used to circumvent the common law prohibition against an Insurer making a subrogated claim against its own Insured.

[78] The claims that are the subject of the Assignments are legally distinct, in that they are the direct claims that the Consumers, who are beneficiaries under the Insurance Policy, would have against an Insured whose actions have given rise to the assignors' losses. The assignors (including some of the Intervenors and the plaintiff), all had their own independent claims for misappropriation of trust funds against the Insureds, Wynn and Wayne Simpson. All of them are claiming their deposits back from Wynn. Conceptually, the Assignments contractually replicate a right of subrogation for the Insurer in respect of claims held by the third party beneficiaries of the Consumer Extension under Coverage C of the Insurance Policy.

[79] The difference is that, by virtue of the Assignments, the Insurer is stepping into the shoes of the Consumers, not the Insured, to advance their claims against the Insured. This is conceptually different than if the Insurer was stepping into the shoes of the Insured to make a subrogated claim against that Insured (in other words, this is not a claim by the Insured against itself).

[80] However, to properly assess whether the Assignments should be treated in the same manner as a subrogated claim by way of analogy in this case requires a fresh consideration of the policy rationale for subrogated claims and the rationale behind the rule prohibiting them from being asserted against an insured:

a. Rights of subrogation for insurers are intended to allow an insurer to advance a claim against a wrongdoer in the name of its insured so that the insured is not over indemnified or unjustly enriched by collecting from both the wrongdoer and under the insurance. Rather, the insurer steps into the shoes of the insured and can advance and recover on those claims against the third-party wrongdoer. This reasoning is, in part, what has led the courts to conclude that the purpose of allowing subrogation by an insurer is not served if the insurer can sue its insured for the very risk that was insured by the policy.

b. Prohibiting an insurer from suing their insured reflects a recognition by the courts that "the insurer has contracted to assume the risk for which insurance was purchased, and to take that risk away from the insured.": Mizen, at para. 103.

[81] Applying that logic here, the Insurer should not be permitted to do indirectly what it cannot do directly, that is, recover from its own Insured amounts paid under the Insurance Policy that it assumed the risk, and was paid premiums, for by extracting and relying upon an Assignment of those claims from third-party beneficiaries. The policy reasons against allowing the Insurer to make subrogated claims against its Insured should also be applied against allowing the Insurer to rely upon an Assignment of those same claims as against their Insured.

[82] This reasoning is consistent with one of the rationales that has been applied to uphold assignments of causes of action by insureds (e.g., owners of damaged property) to their insurers, which is based on the assignment being viewed as an extension of the insurer's right of subrogation: see Fredrickson v. Insurance Corporation of British Columbia (1986), 28 D.L.R. (4th) 414 (B.C. C.A.), 3 B.C.L.R. (2d) 145, aff'd, [1988] 1 S.C.R. 1089, at para. 28. In this case, the Insurer has been found not to have a right of subrogation against the Insured (the Debtor, Wynn) for claims paid to third-party beneficiaries, and the logic should be extended to prevent the Insurer's attempt to rely upon the Assignments from those third-party beneficiaries which themselves are properly viewed as extensions of the right of subrogation.

[83] Insofar as the plaintiff and Intervenors (and other Consumers) have not fully recovered their deposits under the Insurance Policy there is no risk of double recovery or over-indemnity if they are permitted to advance their remaining claims against the Insured (Wynn) directly. Conversely, to permit the Insurer to claim against the limited pool of its Insured's funds would defeat the consumer protection objectives of this mandatory insurance framework. To the extent that there are funds available from the Insured to increase the recoveries of Consumers, the Insurer should not be permitted to use an assignment to recoup payments made under the Insurance Policy from the Insured before Consumers with direct claims against the Insured have been made whole.

[84] No determination has been about the validity or enforceability of the Assignments on other grounds, such as whether there was any consideration or whether they were procured under duress. These were not the focus of the submissions of any of the participating parties. The policy grounds are sufficient in this case to prevent the Insurer from relying upon the Assignments to participate in the Proposed Distribution of the limited funds of the Insured (Wynn) at the expense of Consumers who have not been repaid the full amount of their deposits.

[85] The Assignments are not effective to the extent that they allow the Insurer to claim against the Insured for amounts paid to the third-party beneficiaries under the Insurance Policy in these circumstances. Accordingly, the Coverholder, on behalf of the Insurer, is not entitled to participate in the Proposed Distribution based on the Assignments that it has received from Consumers.

D. The Proposed Distribution Revisited

[86] The Receiver explained that it did not run a claims process because it already knows that the universe of potential claimants to the funds it holds are the Consumers who seek repayment of the deposits they advanced to the Insured. The Receiver divided these Consumers into two categories: (i) the plaintiff and the Intervenors; and (ii) the Coverholder on behalf of the Insurer in reliance upon Assignments from Consumers, and proposed to treat them differently, allowing the plaintiff and the Intervenors to share in the Proposed Distribution but not the Coverholder (purporting to assert claims on behalf of other Consumers).

[87] The decision not to permit the Coverholder on behalf of the Insurer to participate in the Proposed Distribution through the assertion of assigned claims against its Insured was based:

a. in part, on the principled extension of the prohibition against subrogated claims (by extension, the assigned claims) being made by the Insurer against the Insured; and

b. in part, on a policy concern about allowing the Insurer to rely on the Assignments to be reimbursed by the Insured for amounts the Insurer paid out to third-party beneficiaries (Consumers) under the Insurance Policy for risks it agreed to assume and insure under the Consumer Extension, when none of the Consumers have had their deposits fully repaid.

[88] Carrying this logic forward, if the Insurer is not permitted to rely upon the Assignments to assert claims against the Insured, the Consumers retain and may assert those claims, just as the plaintiff and the Intervenors (some of whom have executed Assignments, some of whom have done so under a reservation of rights and some of whom have not done so (and have not received any payment under the Insurance Policy)) are doing. The objective, from the perspective of the court's oversight of the Proposed Distribution from the Debtor/Insured's estate, is for all of the Consumers with claims against the Insured for the repayment of their deposits to be on equal footing.

[89] The Receiver does not need to do a call for claims. The Receiver's determination, that the potential universe of claimants with entitlement to share in the Proposed Distribution are the Consumers under the Insurance Policy is reasonable. However, the Receiver needs to obtain from the Coverholder or the Insurer (whichever of them has the information) the names and contact information for each Consumer who was required to provide an Assignment in order to be paid a portion of their lost deposit under the Insurance Policy, together with any available information about the total amount of each of their deposits and how much has been repaid by the Insurer. The Coverholder and the Insurer should provide this information to the Receiver, and to the extent that they do not have all of this information, they should provide whatever information they have, or use the contact information that they have to communicate with the Consumers on the Receiver's behalf, to obtain their permission to pass along their information or instruct them to contact the Receiver directly by a set date that the Receiver and the Coverholder shall agree upon.

[90] The Receiver shall thereafter prepare a further report to update its Proposed Distributions to include all known Consumers (including but not limited to the plaintiff and the Intervenors) who have not been repaid the full amount of their deposits, so that the available funds can distributed to them on an equitable basis to be calculated and determined by the Receiver and recommended to the court for approval.

[91] This outcome, allowing for the participation of all Consumers in the Proposed Distribution, not just the plaintiff and the Intervenors, was not sought by any participating stakeholder on this motion, but it is what I have determined, in the exercise of my discretion and oversight over this receivership, to be the most just and equitable way in which to distribute the remaining funds held by the Receiver in the particular circumstances of this case. It would not be fair and equitable that these funds be distributed only to the plaintiff and the Intervenors and not to any other Consumers just because the Coverholder/Insurer are precluded from asserting the claims of those other Consumers.

Standing Argument Raised at the Hearing

[92] Two of the Intervenors had counsel present at the hearing. Neither of them filed a factum. Both made brief oral submissions, supporting the Receiver's Proposed Distribution. A standing argument was raised and dismissed orally at the hearing of this motion. The court's determination of that issue is summarized in this section of the endorsement.

[93] In the course of the submissions made by Mr. Belsito, on behalf of the Intervenor P. Campagna Investments Limited, it was suggested that the Coverholder has no standing to make any submissions, either in writing or orally, in respect of the issues before the court. Unlike the Intervenors, the Coverholder did not seek leave to intervene in this proceeding. That said, it has maintained a presence and interest in some of the assets of the Debtor, for example by registering a Caution and being present for various steps in the proceeding.

[94] No objection was raised by the Intervenors or anyone else when this motion was timetabled and set for the July 22, 2025 hearing, in which it was clearly contemplated that the Coverholder would be submitting a factum and making oral submissions in opposition to the Receiver's Proposed Distribution. This standing argument appeared to be an afterthought, made by counsel as he was on his way out the door before the lunch break.

[95] The court expressed the view at the hearing, and continues to be of the same view, that any party asserting a claim to an interest in a Proposed Distribution has standing to appear and make submissions at the Distribution hearing. Other concerns about the standing objection include the lack of any authority or written submissions or notice that this objection was going to be raised, which deprived the Coverholder of any reasonable opportunity to respond to it.

[96] An oral ruling was made at the hearing that this motion would not be decided on the basis of any lack of standing on the part of the Coverholder/Insured to appear in this proceeding because it had not formally sought intervenor status. To the extent leave was required for the Coverholder to assert claims in respect of the Proposed Distribution on behalf of the Insured, it was implicitly granted in the original scheduling endorsement that contemplated the Coverholder's participation. Its standing and right to participate was re-affirmed by the court at the hearing when the standing objection was raised for the first time.

Approval of the Receiver's First Report, Activities, Fees and the Fee Accrual

[97] The Receiver seeks the approval of the following fees and disbursements of itself and Cozen O'Connor, as described in the First Report and the Fee Affidavits appended thereto:

a. Fees of the Receiver from October 25, 2023 to May 7, 2025, totaling $61,979.37, charged at an average billing rate of $602.74 per hour; and

b. Fees of Cozen O'Connor from February 19, 2025 to May 8, 2025, totaling $34,948.64, charged at an average billing rate of $473 per hour.

[98] The Receiver also seeks approval of the Fee Accrual in the amount of $91,000 and Final R&D. The Fee Accrual consists of the fees of Cozen O'Connor in the amount of $34,948.64 plus an additional $25,000 for each the Receiver and Cozen O'Connor, plus HST for additional fees incurred after the date of the fees (May 7, 2025 for the Receiver and May 8, 2025 for Cozen O'Connor) to complete the administration of these proceedings.

[99] The Fee Accrual is reasonable in the circumstances and accurately reflects the work to be completed by the Receiver and Cozen O'Connor to complete the administration of the Receivership Proceedings, which includes, among other things, the completion of the factum and any reply facta for this motion, preparation and attendance in Court and completion of the Distributions.

[100] Paragraph 18 of the Appointment Order provides that the Receiver and its counsel shall be paid their reasonable fees and disbursements, in each case their standard rates and charges unless otherwise ordered by the Court on the passing of accounts. I am satisfied that the Receiver's activities set out in the Receiver's First Report were conducted within the ambit of its powers granted by the Appointment Order and each of the activities were necessary to ensure that the proceedings were as orderly, effective and fair to all stakeholders as possible. They were undertaken in furtherance of the Receiver's duties and are consistent with the Receiver's powers, as set out in the Appointment Order. The Receiver has acted reasonably and in good faith throughout these proceedings and in a manner consistent with its mandate, even though its recommendation with respect to the Proposed Distribution has not been entirely accepted by the court. The insurance issues are nuanced and complicated and a motion was required.

[101] The approval of the Reports and the activities of the Receiver described therein has been made subject to the standard qualification that has become the Commercial List practice to include in these types of orders. The statement of receipts and disbursements appears to be in order.

[102] It has become the practice of the court to periodically approve the activities of its court appointed officers to ensure that their activities are being conducted in a prudent and diligent manner, and it is within the court's inherent jurisdiction to do so: see Target Canada Co. (Re), 2015 ONSC 7574, 31 C.B.R. (6th) 311, at para. 23.

[103] The professional fees claimed for the Receiver and its counsel are supported by affidavits and reflect the work that has been done, and reasonable estimates of work to be completed until its discharge. The fees are commensurate with the tasks performed and the Receiver considers the fees and hourly rates to be reasonable. I find them to be fair, reasonable and justified in the circumstances and having regard to relevant factors: see Bank of Nova Scotia v. Diemer, 2014 ONCA 851, 327 O.A.C. 376, at paras. 33, 44-45.

[104] The Receiver believes that the Fee Accruals are sufficient and necessary to cover its fees and the fees of its counsel to the completion of these proceedings, and those accruals are approved on the basis of that recommendation. If the Fee Accruals need to be updated to take into account any additional work that the Receiver has to do in order to give effect to the additional claims by other Consumers that the court has directed be accounted for in a revised Proposed Distribution, a supporting affidavit for such should be provided to the court together with the revised proposed form of order.

Requested Discharge and Release of the Receiver

[105] On completion of the remaining activities and filing the Discharge Certificate, the Receiver will have substantially completed its mandate as contemplated by the Appointment Order, and under the Bankruptcy and Insolvency Act, R.S.C. 1985, c. B-3.

[106] To avoid the costs of making a further motion to the court to obtain the Receiver's discharge, the Receiver seeks an order at the same time as the Proposed Distribution is approved, for it to be discharged upon the filing by the Receiver of a Discharge Certificate confirming that the Receiver has completed its remaining duties.

[107] The terms of the proposed Distribution and Final Discharge Order of the Receiver are consistent with the Commercial List Model Receiver Discharge Order and are appropriate in the circumstances. The releases granted to the Receiver - which release the Receiver from any current or future liability arising out of its actions or omissions, save for gross negligence or wilful misconduct - is a standard term in orders discharging a receiver, and is granted by the courts in the absence of any evidence of improper conduct on the part of the receiver: see Pinnacle v. Kraus, 2012 ONSC 6376, at para. 47.

[108] In light of what the court has ordered regarding the additional work that the Receiver must do before the Distribution and Final Discharge Order will be signed, the Receiver will need to confirm for the court when it next reports with its revised form of order that incorporates the revised Proposed Distribution whether this mechanism for the court to approve its future discharge based on a Discharge Certificate is still appropriate.

Costs of this Motion

[109] The claimed partial indemnity costs of the Coverholder for this motion was for fees of $11,026.20 and HST (13%) of $1,433.40, for a total $12,459.60. The Receiver's certified partial indemnity costs in its costs outline were higher, for an all-inclusive total of $25,745.02.

[110] Neither party obtained the relief they were seeking. While the Coverholder's claims are not going to be included in the Proposed Distribution, their position on this motion has resulted in the inclusion of the underlying claims of the Consumers. The Coverholder's assertions and the opposition to them exposed a fallacy in the asserted position of the plaintiff and the Intervenors, regarding their side agreement to share in the funds being distributed to the exclusion of other similarly situated creditors of the Debtor, that the Receiver Proposed Distribution sought to give effect to.

[111] Having regard to the importance of the issues, the outcome and other relevant factors under Rule 57, and in the exercise of my discretion under s. 131 of the Courts of Justice Act, R.S.O. 1990, c. C.43, there shall be no costs of this motion awarded in favour of any party. The effect is that the Receiver's cost will be paid out of the funds held by the Receiver prior to distribution, which will then be ratably distributed as a cost to all Consumers with claims against the Debtor for the return of their deposits. I consider that to be a just, fair and reasonable result in the circumstances.

Final Disposition

[112] I will sign a revised form of Distribution and Final Discharge Order once the Receiver has prepared an updated report and the revised form of order has been settled to reflect the court's determination that it provide for the equitable inclusion of all known Consumers' claims in the Proposed Distribution.

[113] The Receiver shall arrange a further case conference before me, to consider its updated Proposed Distribution and revised form of order based upon the court's directions herein, on notice to all other parties and stakeholders.

Kimmel J.

Date: October 6, 2025

Footnotes

[1] The act was amended and renamed the Trust in Real Estate Services Act, 2020, S.O. 2020, c. 1, but the amendments do not appear to be material to the issues in this case.

[2] This is a basic principle of Mareva orders. While not cited by the parties, support for this can be found in Aetna Financial Services Ltd. v. Feigelman, [1985] 1 S.C.R. 2, at para. 28 and Canadian Imperial Bank of Commerce v. Credit Valley Institute of Business and Technology, at para. 17, for example.

[3] The same argument was attempted as against Wayne Simpson on a theory that he is also not an Insured, but the court has found that he was.

[4] Fredrickson was not referenced by the parties but it is followed in a case cited by the Coverholder: Gentra Canada Investments Inc. v. Lipson, 2011 ONCA 331, 106 OR (3d) 261, at paras. 21-37.

[5] There may be other circumstances in which an insurer could rely upon an assignment from a third party beneficiary to advance a claim against an insured. It is not the role of the court to anticipate or speculate about what those circumstances might be. The policy analysis has to be applied to the specific circumstances of each case.