Tim Hogan

The court-appointed Receiver and an equipment lessor brought motions seeking declarations that the respondent, Hub Truck Centre, did not have valid repair and storage liens over certain trucks formerly operated by the debtor.

Hub had refused to surrender the vehicles, claiming over $2 million in liens.

The court found that Hub failed to prove it was a 'repairer' or 'storer' under the Repair and Storage Liens Act, as there was no evidence of an understanding that it would be paid.

Furthermore, Hub lost any potential possessory liens because the vehicles constantly moved in and out of its yard, and it failed to obtain signed acknowledgments of indebtedness to perfect non-possessory liens.

The motions were granted, the liens were declared invalid, and substantial indemnity costs were awarded against Hub.

The Court of Appeal for Ontario dismissed the appeal of 170 Willowdale Investments Corp. regarding the distribution of proceeds from the sale of its hotel assets in receivership.

The appellant argued that Royal Bank of Canada (RBC), as an unsecured creditor with respect to the real property, should not receive a distribution from the net proceeds of the sale.

The court held that the Approval and Vesting Order (AVO) did not preclude payment to unsecured creditors after secured creditors were paid, and that the motion judge properly authorized the distribution to RBC, including for a loan not yet due, as there was no prejudice to the debtor.

The Court-appointed Receiver sought approval of its second report, activities, professional fees, and proposed distributions, including a significant distribution to RBC as a secured creditor.

The Debtor, 170 Willowdale Investments Corp., opposed the distribution to RBC, arguing that RBC lacked a registered security interest in the real property whose sale generated the proceeds, and thus had no priority claim to those proceeds.

The court found that the Debtor was in default of its obligations to RBC, and that RBC's general security agreement (GSA) granted a valid and perfected security interest in all of the Debtor's present and after-acquired personal property, including money and proceeds from the sale of any assets.