Timothy R. Dunn

The interim receiver sought an order to release holdback funds totaling $449,881.87 to be added to the proposal fund for distribution among creditors.

The respondent claimed the funds based on a mortgage that had been discharged and alternatively sought a constructive trust.

The court found that the mortgage constituted both a fraudulent conveyance under the Fraudulent Conveyances Act and an unjust preference under the Assignments and Preferences Act.

The court dismissed the respondent's motion and granted the interim receiver's motion, allowing the holdback funds to be distributed to creditors in accordance with the approved proposal.

The Canadian Imperial Bank of Commerce (CIBC) initiated receivership proceedings against 1340182 Ontario Limited and Kazembe & Associates Professional Corporation.

The court-appointed Receiver, MNP Ltd., sought approval of its second report, fees, and authorization to assign 1340182 Ontario Limited into bankruptcy, and to distribute proceeds from the sale of a property.

A key dispute arose regarding the priority of mortgages on the property, specifically between Arthur Bryan, 923944 Ontario Ltd., and CIBC.

Bryan claimed his earlier mortgage was fraudulently discharged and sought declaratory relief to restore its first-ranking priority.

The court dismissed Bryan's cross-motion, finding that even if the discharge was fraudulent, the subsequent mortgages of 923944 Ontario Ltd. and CIBC were valid and enforceable under the Land Titles Act, as they were not fraudulent instruments and the mortgagees had no actual or imputed knowledge of fraud.

The court approved the Receiver's report and authorized distribution according to the registered priorities (923944 Ontario Ltd. first, CIBC second).