Ontario Court Of Appeal Summaries (May 19 - 22, 2015)

Hello everyone. Below are summaries of this week's Ontario Court of Appeal decisions. Topics covered include investigative receivership orders, reconsideration of a denied leave to appeal, summary judgment, extension of time to appeal, mortgages, and contract interpretation.

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Akagi v. Synergy Group (2000) Inc, 2015 ONCA 368

[Simmons, Blair and Juriansz JJ.A]

Counsel: J. Lisus and J. Renihan, for the appellants, Student Housing Canada and RV Inc. J. Spotswood and W. McDowell, for the appellants, Integrated Business Concepts Inc. and Vincent Villanti D. Magisano and S. Puddister, for the appellant, Ravendra Chaudhary M. Katzman, for the appellants, Synergy Group (2000) Inc., Shane Smith, Nadine Theresa Smith, David Prentice, and Jean Lucien Breau and 1893700 Ontario Limited. J. Leon and R. Promislow, for the respondent, J.P. Graci & Associates (the court-appointed receiver) T. Corsianos, for the respondent, Trent Akagi

Keywords: Receiverships, Fraud, Civil Procedure, Default Judgments, Receivership in Aid of Execution, Investigative Receivership, Certificate of Pending Litigation

Facts: Mr. Akagi invested in a tax program marketed and sold by Synergy, which was supposed to generate tax loss allocations for him, but did not do so in the long term. The Canada Revenue Agency ("CRA") became involved in the matter, and re-assessed Mr. Akagi's tax claims, indicating that it was conducting an investigation into the affairs of Synergy, and that it believed the latter's operations were a sham.

Mr. Akagi sued Synergy for fraud and obtained a default judgment. Shortly after, Mr. Akagi applied for and obtained an ex parte order appointing a receiver over all assets, undertakings and property of Synergy and another company, known as Integrated Business Concepts ("IBC"). The request was granted under s. 101 of the Courts of Justice Act.

Based on further ex parte applications, the receivership evolved into a wide-ranging "investigative receivership", freezing and reaching assets of 43 additional individuals and entities, including authorizing registration of certificates of pending litigation against their properties. None of the additional targets was party to the receivership proceeding. Only three were connected to the underlying Akagi action. Only 2 were actually judgment debtors. The respondent's claim also purported to protect the interests of some 3800 unnamed investors affected by the scheme.

In September of 2013, the appellants moved unsuccessfully before the application judge in a "come-back proceeding" to set aside the receivership orders. They appealed from the September 16th order and the previous ex parte orders to the Court of Appeal.

Issue: Whether the receivership orders should be set aside.

Holding: Appeal allowed. The contested orders were set aside.

Reasoning:

(1) The Court relied on both procedural and substantive grounds to set aside the contested orders.

(2) On the procedural side, the court noted that ex parte proceedings are to be taken sparingly, and on full disclosure, in circumstances where it is demonstrated that notice to other parties would undermine the purpose of the proceeding. Here, the receiver failed to prepare a notice of motion or application, a motion or application record, or a proper evidentiary foundation for their request. Moreover, while the Court deferred to the applications judge on this point, the respondent's failure to disclose that the CRA investigation upon which the ex parte receivership application was founded had been discontinued, raised doubts as to whether there had been full and fair disclosure.

(3) With regard to substantive issues, the Court noted that the orders were made on the faulty premise that the receiver be appointed to carry out a broad, stand-alone investigative inquiry—the civil equivalent of a criminal investigation or public inquiry—to determine whether wrongs were suffered by a myriad of non-party persons not represented by anyone in the proceedings, who had expressed no interest in becoming parties, or in having their interests protected in the proceedings. Moreover their interests did not need to be protected to preserve the interests of the creditor, which was a crucial consideration.

(4) The overarching nature of the relief granted was unnecessary to protect Mr. Akagi's interests. The purpose of appointing a receiver in aid of execution under s. 101 of the Courts of Justice Act is to protect the interests of a claimant seeking an order where there is a real risk that recovery would otherwise be seriously jeopardized. There was no evidence that this was an issue in this proceeding.

(5) Finally, certificates of pending litigation relate to land. Mr. Akagi did not commence, nor did he intend to commence, an action asserting a claim to an interest in land. As such, the order authorizing the issuance of certificates of pending litigation must be set aside as well.

Mujagic v. Kamps, 2015 ONCA 360

[Doherty, Gillese and Lauwers JJ.A.]

Counsel: R. M. Godard, for the moving parties K. C. Dickson, for the responding party

Keywords: Torts, Motor Vehicle Accident, Motion for Leave to Appeal, Motion to Set Aside or Reconsider, Rules of Civil Procedure, Rules 59.06 and 61.16, New Facts Arising, Change in Law, Lack of Jurisdiction

Facts: The plaintiff, Ms. Mujagic, was involved in a car accident in 2001. She sued in 2011 for neck and back injury allegedly sustained during the accident...