SUPERIOR COURT OF JUSTICE - ONTARIO
RE: AFSHIN SHIRDARREH, Plaintiff
AND:
4140 BATHURST INC. and AMIR (ANTHONY) NADILOEY, Defendants
AND RE: AMIR (ANTHONY) NADILOEY, Plaintiff by Counterclaim
AND:
AFSHIN SHIRDARREH and BEHNAZ KHOSHKHO ESFAHANI, Defendants by Counterclaim
BEFORE: AKAZAKI J.
COUNSEL: Howard Manis and Daniel Litsos, for the Moving Party - Rosen Goldberg Inc. (Court-Appointed Receiver)
Aaron Blumenfeld, Rachel Pham, and Avi Slodovnick for the Non-Party - Beth Joseph Chabad
Mryam Sarkis and David Ward, for the Non-Party, Vault Capital Inc.
Esmaeil Mehrabi, for the Plaintiff
Eli Karp, for the Defendants
James Riewald, for the Non-Party, Royal Bank of Canada
HEARD: February 3, 2026, with supplementary materials due February 20, 2026
REASONS FOR DECISION
Overview
1The court heard competing motions by Rosen Goldberg Inc. (“the receiver”) and Beth Joseph Chabad (“BJC”) for approval of their respective agreements of purchase and sale of certain Toronto properties. The court must determine whether authority of a receiver appointed by the court under the Ontario Business Corporations Act, R.S.O. 1990, c. B.16, s. 248(3) (“OBCA”), and the Courts of Justice Act, RSO 1990, c C.43, s. 101 (“CJA”), halts and prevails over a sale by a mortgagee pursuant to the statutory power under the Mortgages Act, R.S.O. 1990, c. M40, s. 24.
2In May 2023, Afshin Shirdarreh started an action under the OBCA for corporate oppression in relation to his 50% shareholding in 4140 Bathurst Inc. (“4140”). The claim alleges mismanagement, fraud, conversion, and other breaches by Amir Nadiloey, the other 50% shareholder. The substance of the allegations and the ensuing counterclaim are irrelevant to the current issue, beyond stating that Mr. Nadiloey consented to a Mareva injunction freezing the assets and to the ancillary receivership order.
3In June 2024, the mortgages on 4140’s various properties, including the relevant property at 4126-4140 Bathurst St., all fell into default. The lender of the mortgage on the Bathurst St. property, Vault Capital Inc., issued a statement of claim and exercised power of sale. It filed a statement of claim on June 27, 2024, against 4140 and the two guarantors (Mr. Shirdarreh and Mr. Nadiloey). Mr. Shirdarreh defended the action, but 4140 and Mr. Nadiloey did not. On July 12, 2024, Vault’s lawyers served 4140 and the guarantors with notice of sale. As prescribed by regulation, the notice stated the amounts of the arrears causing the mortgage default. There was no attempt during the thirty-five day grace period to bring the mortgage into good standing.
4After expiry of the grace period, Vault listed the property for sale in September 2024. In November 2024, Vault accepted a conditional offer by a BJC, a charity, to purchase the property. BJC wished to purchase the property to serve as an annex to its Jewish community centre.
5On December 17, 2024, Shin J. of this court granted the consent Mareva injunction restraining the defendant Amir Nadiloey from dissipating his assets and the those of the corporation. That order also included a standard receivership order appointing Rosen Goldberg Inc. as interim receiver of the assets of 4140. The terms of appointment authorized the receiver to sell the Bathurst St. property and a property at 97 York Downs Dr., with court approval.
6The BJC purchase was to close in January 2025. However, discovery of environmental contamination caused both Vault and BJC to extend the closing date. BJC and Vault engaged and worked with consultants to develop a site remediation plan. Later that month, Vault provided the receiver with the BJC’s purchase agreement.
7In February 2025, the receiver informed Vault Capital of the opinion that the two properties should be marketed en bloc to maximize sale prices. In August 2025, an entity called Hatzoloh Toronto submitted an unsolicited offer for the properties. In November 2025, the receiver and Hatzoloh entered an agreement of purchase and sale for the two properties. In the receiver’s opinion, the combined sale should yield a greater net realization of the Bathurst St. property for 4140 and the other stakeholders in the oppression action than the sale to BJC.
8Mr. Shirdarreh prefers the receiver’s sale to Hatzoloh, because it is in his financial interest to stem the defaults and losses caused by his business partner’s alleged wrongdoing. His sole substantive contributions to the debate are the contentions of defects in Vault’s power of sale notice and of its failure to obtain the receiver’s consent to the closing extension beyond January 20, 2025.
9The deal between Vault and BJC is now firm and ready to close, with conditions lifted and an increased deposit. The same can be said of the receiver’s sale to Hatzoloh.
10The parties’ motion records and factums set up argument at the hearing based largely on the merits of the two sales. Neither side of the dispute directly considered the competing legal prevalence of one sale agreement over the other, beyond the receiver’s submission that the terms of the court order nullified an executory contract between Vault and BJC. The issue only appeared in a footnote in BJC’s factum. Because other parties’ counsel may not have noticed it, I directed counsel to file further evidence and submissions, with a deadline of February 20, 2026. At the request of the receiver regarding urgency arising from ongoing finance charges, the decision is being released on an expedited basis today, subject to editorial changes prior to publication.
11Because of my conclusion that the receivership order did not interfere with Vault’s power of sale and did not suspend Vault and BJC’s obligations to complete the purchase and sale agreement, it would be wrong to approve the sale to Hatzoloh. Ultimately, the contrary result would mean that mortgagors could throw a wrench into mortgage enforcement processes in any internal business dispute caused by the alleged misconduct of a principal or trusted employee of a mortgagor. The court cannot and should not interfere with the innocent mortgage lender’s statutory rights, absent fraud or other misconduct on the part of the mortgagee that would undermine its right to sell.
12My reasons for arriving at this conclusion are organized by the following groups of issues:
Shirdarreh’s Opposition to Vault’s Motion and Support for Receiver’s
Competing Interests, Legal Processes, and Values
Effect Of Receivership Order on Power of Sale
13Before turning to these issues, I will address two items of ancillary relief sought in the motions.
14BJC’s motion includes a request for leave to be added as a party intervenor for the purposes of the motion. Rule 13.01 permits the court to grant such status, if BJC has an interest in the subject matter, may be adversely affected by a judgment, or if there exists a question of law or fact in common with one or more of the parties. It is obvious that granting approval to the sale to Hatzoloh would effectively prevent BJC’s purchase. I find that BJC meets the criteria and that its intervention will not unduly delay or prejudice the rights of the parties. Moreover, the receiver’s motion included both Vault and BJC in the service list, making them parties to the motion.
15The receiver’s motion includes a request for a sealing order on its unredacted motion record, because it contains several appendices of information from the bidding process. That type of information has been held to satisfy the test for a sealing order, at least for a limited duration: Acerus Pharmaceuticals Corporation (Re), 2023 ONSC 3314, at para. 39; and Walter Energy Canada Holdings, Inc. (Re), 2018 BCSC 529, at para. 13. I therefore grant the sealing order on the unredacted motion record, but it shall automatically expire 90 days from the date of this order.
(1) SHIREDARREH’S OPPOSITION TO VAULT’S MOTION AND SUPPORT FOR RECEIVER’S
16Mr. Shirdarreh supports the receiver’s sale to Hatzoloh but opposes the one by Vault to BJC. He submitted that Vault was disqualified from exercising power of sale, has mismanaged the property, failed to provide notice of sale on the plaintiff, and failed to comply with s. 22 of the Mortgages Act. He stated that, if the receiver’s sale is not permitted to proceed, there are triable issues concerning Vault’s right to sell.
17Vault submitted evidence, including registered postal receipts, that its lawyers duly issued and delivered the notice of sale on July 12, 2024. In response to this, the evidence on behalf of Mr. Shirdarreh that he did not receive the notice was an articling student’s affidavit stating:
I am advised by Mr. Mehrabi that at no point following the commencement of the Vault Action or Vault's mortgage going into default has Mr. Shirdarreh received a Notice of Sale under the Mortgage Act from Vault for the sale of the Bathurst Property.
I am further advised by Mr. Mehrabi that since taking over possession of the Bathurst Property, Vault has mismanaged the Bathurst Property and has incurred an excessive amount of unexplained expenses.
18Mr. Mehrabi is Mr. Shirdarreh’s lawyer. If Mr. Shirdarreh did not receive the notice, he was a guarantor and not the mortgagor. There was no evidence that the registered post did not reach 4140 or the company’s other principal, Mr. Nadiloey. Even if the issue of delivery on Mr. Shirdarreh were material to the exercise of power of sale, the above evidence provided no basis to counter the plain evidence from Vault’s lawyers that Canada Post delivered the notices by registered mail to the address prescribed under s. 33 of the Mortgages Act. If Mr. Shirdarreh could no longer be reached at the last known address, it was on him to notify Vault. To consider the duties and obligations otherwise would be to thwart mortgagees from realizing on their security in every case where the mortgagee’s representative abandons a property without a trace.
19Although technically permitted under rule 39.01(4), this double hearsay based on information, not from Mr. Shirdarreh but from his lawyer, Mr. Mehrabi, is not proof of the statement. Mr. Shirdarreh could have submitted his own evidence on the point, as he has done in other motions before the court. If it was not double hearsay, it did not contain evidence of how Mr. Mehrabi knew his client never received the notice or that the mortgagee had mismanaged the property.
20The only evidence on the mismanagement allegation was that of Vault, whose employee deposed that it hired a professional property management firm. The receiver did not contest the validity of the notice of sale or complain about Vault’s management of the property. In any event, mismanagement would be an issue between Vault and 4140 in the accounting of the mortgage discharge for rent collections. It is not an issue affecting the validity of the power of sale.
21Mr. Shirdarreh’s lawyer also argued that Vault’s right to sell the property was invalidated by s. 22 of the Mortgages Act, because Vault’s lawyers responded to a s. 22 request of October 22, 2024, on November 7, 2024. The response fell on the sixteenth day, when counted in accordance with s. 89(5) of the Legislation Act, 2006, S.O. 2006, c. 21, Sched. F. Subsection 22(3) provided:
(3) The mortgagee shall answer a notice given under subsection (2) within fifteen days after receiving it, and, if without reasonable excuse the mortgagee fails so to do or if the answer is incomplete or incorrect, any rights that the mortgagee may have to enforce the mortgage shall be suspended until the mortgagee has complied with subsection (2).
22On a plain and grammatical reading of the above provision, the mortgagee’s enforcement rights were suspended upon the failure of the mortgagee to provide the answer within fifteen days: i.e., from midnight of November 6 until 4:47 p.m. on the 7th, the minute when the law clerk at Miller Thomson sent the statement to Mr. Mehrabi. The general requirement of strict compliance by a mortgagee has been qualified. Lateness of response does not invalidate a power of sale, if the on-compliance is inconsequential: Pembroke Developments Inc. v. Singh et al., 2024 ONSC 5428, at para. 43.
23The court need not consider the abstract question of the effect of seventeen hours of the suspension under s. 22(3). The purpose of s. 22 is to relieve the mortgagor of loan acceleration on a default and to afford an opportunity to restore the mortgage to good standing: Cranberry Cove Tower Inc. v. Monarch Trust Co., 2003 14548 (ON SC), at para. 145, aff’d 2005 2053 (ON CA). This provision did not affect Vault’s right to rely on the July 12 notice upon the expiry of thirty-five days, under s. 32.
24A contextual reading of s. 22 with Parts II and III of the Mortgages Act reveals that s. 22 is of use to a mortgagor only before or during the thirty-five day period for accrual of the mortgagee’s power of sale after giving notice. To construe s. 22 as suspending a sale already in progress, as proposed Mr. Shirdarreh’s counsel, would lead to the abuse of borrowers sending out s. 22 notices every month and demanding new statements of arrears to account for the previous month’s interest, penalties, and expenses.
25The record disclosed no cogent basis to require a trial to impeach Vault’s procedure exercising power of sale. The receiver stood in the shoes of 4140 and did not try to argue any defect in the power of sale apart from the argued conflict with the court order. Rather, the receiver contested Vault’s sale to BJC on the financial advantage to 4140 of its sale of both properties and on its court-appointed authority to sell them before Vault could complete its sale of one of them.
(2) COMPETING INTERESTS, LEGAL PROCESSES, AND VALUES
26The receiver’s case for the sale of the two properties to the common purchaser was based chiefly on the net financial advantage to the corporation, 4140. Because none of the parties to the plaintiff’s claim and Mr. Nadiloey’s counterclaim expressed an interest in keeping the properties, 4140’s stakeholders have a common interest in realizing the more gainful deal.
27Both sides submitted that their respective sales were provident and met the guidelines for court approval known as the principles in Royal Bank of Canada v. Soundair Corp. (1991), 1991 2727 (ON CA), 4 O.R. (3d) 1 (C.A.); summarized in Cameron Stephens Mortgage Capital Ltd. v. Conacher Kingston Holdings Inc., 2025 ONCA 732, at para. 33.
28In the case of Vault, it was not required to be as even-handed as the receiver. A mortgagee’s sale ordinarily does not require court approval. Unless an order for possession is required, mortgagees usually effect power of sale through self-help, by hiring a bailiff to lock up the property and a realtor to list it for sale. The mortgagee’s duty was to take reasonable steps to realize the market value: Lay v. 1222055 Ont. Inc., 2005 30865 (ON SC), at para. 30. BJC submitted grounds to believe the receiver’s sale was not Soundair compliant. Between Vault and the receiver, there was no serious criticism of their respective processes for exposing the property to the market. Nevertheless, the issue of price obtained by a mortgagee does not derogate from the right to sell. Improvident sale is only an issue that can be raised by a mortgagor in a subsequent claim for damages.
29One cannot readily compare the sale of the two properties to the sale of one, because the receiver’s purchaser has offered a combined amount for both properties. The receiver submitted that its sale to Hatzoloh was more advantageous. Its motion record contained a confidential memorandum (as updated) showing a difference of approximately $1 million. BJC maintained that one cannot compare apples and oranges, citing multiple known and unknown factors in the inclusion of the second property, including mortgages, commissions, appraisal values, and receiver’s fees.
30For its part, BJC relied heavily on its status as a charity and on the benefit to the local Jewish community of an extension of its facilities for such uses as childcare and religious education. BJC also relied on the consequential value to its existing stakeholders of a good purchase price in the power of sale.
31The receiver’s duty is to obtain the highest value of all assets for 4140, especially to recover the corporation’s value against the alleged dissipations by Mr. Nadiloey that resulted in the Mareva injunction. Perhaps this point is less sentimentally compelling than BJC’s charitable or public benefit arguments. Nevertheless, the legal outcome of this dispute cannot stem from a values analysis in which the court must choose the more desirable outcome from the community’s perspective.
32I also decline to embark on an economic comparison to determine which deal better approximates true market value. Perhaps with the assistance of independent and separate appraisals of the properties, one might extrapolate a method for determining which deal was more profitable. There was no such evidence. The confidential memo appeared to be based on a realtor’s opinion.
33If one properly reflected on the tactical dynamic of this issue, the receiver aims to realize the highest market value, whereas BJC’s is to obtain the purchaser’s best (i.e. lowest) price. Vault’s only interest is to honour the deal it lawfully entered with BJC. 4140’s interest in the highest price is no more and no less valid than BJC’s in paying the least that the market can bear. To subject the sale by Vault to BJC to the same economic criteria as the receiver’s is to require a contortionist’s flexibility that offends the court’s conscience: see the similar reasoning in Cansulex Ltd. v. Reed Stenhouse Ltd., 1986 898 (BC SC), at para. 150, adopted in Jon Picken Ltd. v. Guardian Insurance Co. of Canada, (1993) 1993 17702 (ON CA), 17 C.C.L.I. (2d) 167 (ON CA), at para. 16. Courts do not like it when parties take different positions out of each side of their mouths. Why should the court encourage a party to do so?
34This is a contest between two contracts. Law and Equity, not the parties’ economic or social interests, govern the issue. Provided there was no serious ground to attack either deal within their separate governing principles, there is no legal or equitable basis for the court to attempt to determine which one was more provident, more virtuous, or fairer to more interested parties. The issue in the motion must be determined by examining whether the receivership order interrupted or superseded Vault’s right to proceed with the sale and BJC’s right to purchase. I will now turn to that point.
(3) EFFECT OF RECEIVERSHIP ORDER ON POWER OF SALE
35Courts generally refuse to interfere with a mortgagee’s exercise of power of sale, once the mortgagee enters a binding agreement with a purchaser: Hornstein v. Gardena Properties Inc., 2006 23142 (ON CA), at para. 9. Absent extreme or exceptional grounds to attack the transaction, the court lacks jurisdiction to block a duly processed power of sale: Bhuiyan v. Gonzales et al., 2025 ONSC 683, at para. 13, citing Arnold v. Bronstein, et al., 1970 245 (ON HCJ), [1971] 1 O.R. 467. The legislature, in enacting the statutory power of sale under Part II of the Mortgages Act, notably in s. 24, has removed the prior jurisdiction over traditional mortgages involving a transfer of the title deed to the lender.
36Citing National Trust Co. v. Saad, 1997 12134 (ON SC), Mr. Shirdarreh’s counsel argued that the mortgagor’s equity of redemption can survive the mortgagee’s acceptance of an offer to purchase, if the sale agreement provides for continued right of redemption. In Saad, the agreement contained the following provision:
The purchaser understands and agrees that the mortgagor has the right to redeem the property up to the time of waiver or expiration of all rights of termination or fulfilment of all conditions and this agreement is subject to that right. In the event of redemption by the mortgagor, this agreement shall be null and void and any deposit monies will be refunded in full without interest.
37In contrast, Vault’s agreement with BJC contains the following clause:
- The Buyer agrees that the Seller may, in its absolute discretion, accept, on or before the closing date or any extension thereof, part payment or redemption of the Mortgage by any party having an interest in the Property and, thereupon, may terminate the Agreement without any liability of any kind to the Buyer.
38I cannot construe para. 5 as continuing or extending 4140’s right of redemption. 4140 lost that right, when it failed to address the notice of sale during the statutory period. The clause simply provided Vault with discretion to accept redemption. Vault has not exercised this provision, and 4140 has filed no evidence that it has tendered the amount required to redeem the mortgage or intends to do so. The above clause does not confer on the court authority to interfere with Vault’s accrued statutory power of sale.
39The consent order of Shin J. dated January 20, 2025, appointed the receiver over the assets and undertakings of 4140, including the Bathurst St. property. It also exclusively authorized the receiver to sell and convey the property, subject to court approval. Section 101 of the CJA provided the Superior Court’s authority to appoint a receiver or receiver and manager by interlocutory order. Section 248(3) of the OBCA provided similar authority to appoint on an “interim or final” basis. Neither provision contains language that prevails over the Mortgages Act.
40One must read any legislation as part of the whole statute book: Sullivan, R., The Construction of Statutes, Seventh Ed. (Toronto: LexisNexis, 2022), at pp. 412-13. Legislative purpose of every statute allows it to coexist harmoniously within that book: Bell ExpressVu Limited Partnership v. Rex, 2002 SCC 42, [2002] 2 S.C.R. 559, at para. 26. The authority to grant an interlocutory (“interim”) order under the OBCA must be constrained by the objects of the legislation. Section 2 of the OBCA limits the statute’s application to the provincially incorporated “body corporate with share capital.” The receivership order, made concurrently under OBCA, s. 248(3), was made on an interim basis based on Mr. Shirdarreh’s motion to stop various oppressive acts allegedly depleting the value of his capital in 4140. BJC is not even such a corporation. As a registered charity, it is governed by the Not-for-Profit Corporations Act, 2010, S.O. 2010, c. 15.
41Nothing in the OBCA grants jurisdiction to the court to restrain a validly constituted power of sale under mortgage. The authority to appoint a receiver of the corporation and its assets to restrain or to prevent further oppressive acts of persons of authority in the corporation and to preserve the assets does not limit the rights of third parties beyond removing the corporation’s ability to deal with them. The legal rights of individual parties to an internal corporate dispute have an external application only under s. 246, if the court grants leave to bring a derivative action.
42The Superior Court’s broad power to grant a mandatory interlocutory order under s. 101 of the CJA, as the successor to English judicature statutes merging law and equity, does not depend on a particular cause of action within its jurisdiction. However, the interlocutory relief must be ancillary to a potential final order in respect of a justiciable right or dispute: Brotherhood of Maintenance of Way Employees Canadian Pacific System Federation v. Canadian Pacific Ltd., 1996 215 (SCC), [1996] 2 SCR 495, at paras. 15-16. For example, a court can issue an interlocutory injunction to preserve rights that will be determined by arbitration: Best v. Darling et al., 2020 NBQB 104, at para. 22.
43The receivership order in this case conferred the exclusive right to sell the Bathurst St. property and purported to remove it from Vault. There has been no appeal or motion to vary it to exclude the subject property. Closer examination of the order, para. 1, reveals that the receiver was appointed over the property as one of the “properties of 4140 Co. acquired for, or used in relation to a business carried on by 4140 Co.” (bold font added). By 2025, the power to sell the property had already passed from 4140 to Vault, under para. 9 of the Standard Charge Terms and under the Mortgages Act. I need not rely on the case law cited by BJC establishing equitable title of purchasers of an executory agreement to purchase real property. The threshold contest here is between the power of sale and the receivership. The receiver must take the property as being subject to charges and other encumbrances – including those in which the holder of statutory power to dispose has already perfected its rights.
44It is trite law that property is a bundle of rights of possession and control. By 2025, the right to sell had passed from 4140 to Vault and was no longer part of the property of 4140. A receivership order does not vest property in the receiver: Deloitte & Touche Inc. v. Boychuk, 2002 ABCA 194, at para. 25. The receiver can only deal with the property as it is and must be subject to the state of title. It was the receiver, not Vault, who was acting ultra vires of its mandate by listing a property for sale already subject to the mortgagee’s power of sale.
45If adopted, the logic of the receiver and Mr. Shirdarreh’s position could strip the rights of mortgagees. In any instance where a business corporation runs into financial difficulty over internal problems, the mortgagor company or potential oppression complainants can move for a receivership order to thwart the rights of a mortgagee whose only sin was to lend its money to the company in good faith. Not even the transfer of a bankrupt’s estate to a trustee will result in such consequences: Bankruptcy and Insolvency Act, RSC 1985, c. B-3, s. 72(2). Much of Canada’s economic activity depends on courts refraining from unwarranted interference with the rights of secured creditors. While I do not read Shin J.’s order as having suspended Vault’s power to sell under its mortgage, I must read it down as not having such effect.
46To read the receivership order as suspending or stripping Vault’s contractual and statutory rights would amount to a deprivation of a third party’s pre-existing property rights: Board of Industrial Relations v. Avco Financial Services Realty Ltd. et al., 1979 230 (SCC), [1979] 2 SCR 699, at 706. Here, Vault’s power of sale accrued prior to the receivership order. It would be a perverse result to allow mortgagors to block a power of sale through such indirect means, when the court lacks jurisdiction to take direct measures to deprive mortgagees of their enforcement rights, absent exceptional circumstances such as fraud. It follows that the court cannot delegate to a receiver power to abrogate a private right that the court itself does not possess.
47It also follows that the existence of an in-progress power of sale is a valid ground for refusing approval of the receiver’s sale, on the basis that the receiver lacks authority. That will be my decision in this case. I do not need to permit the sale to BJC to proceed. However, to the extent required, the court should allow the parties to the sale to amend the closing period to account for the delay resulting from the receiver’s intervention and the court’s delays in hearing and deciding the motion.
Conclusion and Costs
48The receiver’s motion for approval of its sale is hereby dismissed, except that a sealing order shall issue on the unredacted motion record. The seal shall automatically expire 90 days from the date of this order.
49The motion by BJC for intervenor status is granted. However, the status shall expire upon closing of the sale to BJC. Although leave is not required for Vault to complete the sale to BJC, I hereby direct that Vault and BJC may amend their agreement to extend the closing date for up to 90 days from today’s date.
50I direct counsel for Vault, BJC, and the receiver, to draft and approve terms of a formal order reflecting paragraphs 48 and 49 above. They shall submit the order for signature by the registrar, pursuant to rule 59.04. The approval of the remaining parties is hereby dispensed with.
51I encourage the parties to resolve the costs of the motions. If they cannot agree, I will invite submissions. Given the number of parties with varying tactical allegiances, all costs outlines and submissions shall be due in 20 days. These materials shall be filed and shall also be sent to my judicial assistant.
52The receiver, as a court-appointed entity, is immune from costs. Any costs submission by the receiver shall be asserted or defended in respect of 4140’s estate only.
Akazaki J.
Date: March 6, 2026