Limits On Investigative Receiverships: Akagi v Synergy Group (2000) Inc., 2015 ONCA 368

In Akagi v Synergy Group (2000) Inc.1, the Ontario Court of Appeal clarified the limits of the duties of receivers appointed by the court to enforce judgment debts, the scope of "investigative receiverships" and the jurisdiction of the Superior Court to encumber the assets of non-parties. The decision also strongly criticizes the cavalier manner in which serious ex parte orders were obtained by the plaintiff.

The case arose from a tax reduction program that had been promoted and sold by Synergy Group (2000) Inc. ("Synergy") to Mr. Akagi and others. The program was a sham and Mr. Akagi was reassessed by the Canada Revenue Agency. He sued Synergy and certain individuals associated with it for fraud. After a number of motions, including a motion for summary judgment, he obtained default judgment in the amount of $137,000. Subsequently, Mr. Akagi applied for and obtained, on an ex parte basis, an order appointing a receiver over all of the assets, undertakings and property of Synergy and an additional company, Integrated Business Concepts Inc. ("IBC").

The primary evidence in support of the ex parte application for a receiver was a three page affidavit from Mr. Akagi to which were attached three affidavits from representatives of the CRA, which had been used in other proceedings. The CRA affidavits outlined the details of a CRA investigation into the tax loss allocation program and indicated that in addition to Mr. Akagi, there may have been as many as 3,800 other investors who were defrauded. Mr. Akagi did not disclose that the CRA investigation had been terminated four months before he brought his motion. Mr. Akagi also did not state in this affidavit that he believed the contents of the three affidavits to be true.

Subsequently, the receiver obtained further orders from the application judge expanding its powers. The receivership order morphed into a wide ranging "investigative receivership" freezing the assets of 43 additional individuals and entities and registering certificates of pending litigation against their properties. None of these additional targets had been a party to the original receivership proceeding. Only three of the targets had a connection to the underlying action brought by Mr. Akagi and only two were judgment debtors.

The receiver brought the subsequent applications without a notice of motion, notice of application or a factum. The receiver simply filed reports with the application judge (on occasion an order would...