ONTARIO SUPERIOR COURT OF JUSTICE … BIOVERSEL TRADING INC. ... Bank of Nova Scotia v. ... Royal Trust Corp. of Canada v. DQ Plaza Holdings Ltd. (1984), 54 C.B.R

Court File No. CV-14-10672-00CL

ONTARIO

SUPERIOR COURT OF JUSTICE

(Commercial List)

B E T W E E N:

HERIDGE S.A.R.L.

Applicant

- and -

GREAT LAKES BIODIESEL INC.,

EINER CANADA INC. And BIOVERSEL TRADING INC.

Respondents

BRIEF OF AUTHORITIES OF THE RESPONDENTS

GOWLING LAFLEUR HENDERSON LLP

Barristers and Solicitors

1 First Canadian Place

100 King Street West, Suite 1600

TORONTO, Ontario

M5X 1G5

Clifton P. Prophet (LSUC #34845K) [email protected]

Nicholas Kluge (LSUC #44159T) [email protected]

Telephone: (416) 862-3509

Facsimile: (416) 862-7661

SOLICITORS FOR THE RESPONDENTS

mailto:[email protected]


Index

INDEX

1. Bank of Nova Scotia v. Freure Village on Clair Creek O.J. No. 5088, 40

C.B.R. (3d) 274.

2. Elleway Acquisitions Ltd. v. Cruise Professionals Ltd. 2013 ONSC 6866,

235 A.C.W.S. (3d) 683.

3. Governors of Dalhousie College at Halifax v. Boutilier Estate [1934]

S.C.R. 642, 95 A.L.R. 1298.

4. Lloyd W. Houlden, Geoffrey B. Morawetz & Janis P. Sarra, The 2014

Annotated Bankruptcy and Insolvency Act (Toronto: Carswell, 2014).

TAB 1

Bank of Nova Scotia v. Freure Village on Clair Creek, 1996 CarswellOnt 2328

1996 CarswellOnt 2328, [1996] O.J. No. 5088, 40 C.B.R. (3d) 274

Copyright © Thomson Reuters Canada Limited or its licensors (excluding individual court documents). All rights reserved. 1

1996 CarswellOnt 2328Ontario Court of Justice (General Division — Commercial List)

Bank of Nova Scotia v. Freure Village on Clair Creek


Bank of Nova Scotia v. Freure Village on Clair Creek et al

Blair J.

Judgment: May 31, 1996Docket: none given

Counsel: John J. Chapman and John R. Varley, for Bank of Nova Scotia.J. Gregory Murdoch, for Freure Group (all defendants).John Lancaster, for Boehmers, a Division of St. Lawrence Cement.Robb English, for Toronto-Dominion Bank.William T. Houston, for Canada Trust

Subject: Corporate and Commercial; Insolvency

Table of Authorities

Cases considered:

Confederation Trust Co. v. Dentbram Developments Ltd. (1992), 9 C.P.C. (3d) 399 (Ont. Gen. Div.) — referred to

Irving Ungerman Ltd. v. Galanis (1991), 4 O.R. (3d) 545, 20 R.P.R. (2d) 49 (note), 83 D.L.R. (4th) 734, 1 C.P.C.(3d) 248, (sub nom. Ungerman (Irving) Ltd. v. Galanis) 50 O.A.C. 176 (C.A.) — referred to

Pizza Pizza Ltd. v. Gillespie (1990), 75 O.R. (2d) 225, 45 C.P.C. (2d) 168, 33 C.P.R. (3d) 515 (Gen. Div.) — referred to

Royal Trust Corp. of Canada v. DQ Plaza Holdings Ltd. (1984), 54 C.B.R. (N.S.) 18, 36 Sask. R. 84 (Q.B.) —referred to

Swiss Bank Corp. (Canada) v. Odyssey Industries Inc. (1995), 30 C.B.R. (3d) 49 (Ont. Gen. Div. [Commercial List])— referred to

Third Generation Realty Ltd. v. Twigg Holdings Ltd. (1991), 6 C.P.C. (3d) 366 (Ont. Gen. Div.) — referred to

Statutes considered:

Courts of Justice Act, R.S.O. 1990, c. C.43

s. 101referred to

Rules considered:

Ontario, Rules of Civil Procedure

http://nextcanada.westlaw.com/Link/Document/FullText?findType=Y&pubNum=6407&serNum=1992374841&originationContext=document&transitionType=Document&vr=3.0&rs=cblt1.0&contextData=(sc.Folder*cid.8cade38cc2cb463c869f2c55c0400c7b*oc.Search)










r. 20.01referred to

r. 20.04referred to

MOTION for summary judgment on covenant on mortgages; MOTION for appointment of receiver-manager.

Blair J.:

1 There are two companion motions here, namely:

(i) the within motion by the Bank for summary judgment on the covenants on mortgages granted by "Freure Management"and "Freure Village" to the Bank, which mortgages have been guaranteed by Freure Investments; and

(ii) the motion for appointment by the Court of a receiver-manager over five different properties which are the subjectmatter of the mortgages (four of which properties are apartment/townhouse complexes totalling 286 units and one of whichis an as yet undeveloped property).

2 This endorsement pertains to both motions.

The Motion for Summary Judgment

3 Three of the mortgages have matured and have not been repaid. The fourth has not yet matured but, along with the firstthree, is in default as a result of the failure to pay tax arrears. The total tax arrears outstanding are in excess of $850,000. TheBank is owed in excess of $13,200,000. There is no question that the mortgages are in default. Nor is it contested that themonies are presently due and owing. The Defendants argue, however, that the Bank had agreed to forebear or to stand-still forsix months to a year in May, 1995 and therefore submit the monies were not due and owing at the time demand was madeand proceedings commenced.

4 There is simply no merit to this defence on the evidence and there is no issue with respect to it which survives the "goodhard look at the evidence" which the authorities require the Court to take and which requires a trial for its disposition: see Rule20.01 and Rule 20.04, Pizza Pizza Ltd. v. Gillespie (1990), 75 O.R. (2d) 225 (Gen. Div.); Irving Ungerman Ltd. v. Galanis(1993) 4 O.R. (3d) 545 (C.A.).

5 On his cross-examination, Mr. Freure admitted:

(i) that he knew the Bank had not entered into any agreement whereby it had waived its rights under its security or toenforce its security; and

(ii) that he realized the Bank was entitled to make demand, that the individual debtors in the Freure Group owed the money,that they did not have the money to pay and the $13,200,000 indebtedness was "due and owing" (see cross-examinationquestions 46-54, 88-96, 233-243).

6 As to the guarantees of Freure Investments, an argument was put forward that the Bank changed its position with regardto the accumulation of tax arrears without notice to the guarantor, and accordingly that a triable issues exists in that regard.

7 No such triable issue exists. The guarantee provisions of the mortgage itself permit the Bank to negotiate changes in thesecurity with the principal debtor. Moreover, the principal of the principal debtor and the principal of the guarantor - Mr. Freure- are the same. Finally, the evidence which is relied upon for the change in the Bank's position - an internal Bank memo fromthe local branch to the credit committee of the Bank in Toronto - is not proof of any such agreement with the debtor or change;it is merely a recitation of various position proposals and a recommendation to the credit committee, which was not followed.






8 Accordingly, summary judgment is granted as sought in accordance with the draft judgment filed today and on which Ihave placed my fiat. The cost portion of the judgment will bear interest at the Courts of Justice Act rate.

Receiver/Manager

9 The more difficult issue for determination is whether or not the Court should appoint a receiver/manager.

10 It is conceded, in effect, that if the loans are in default and not saved from immediate payment by the alleged forbearanceagreement - which they are, and are not, respectively - the Bank is entitled to move under its security and appoint a receiver-manager privately. Indeed this is the route which the Defendants - supported by the subsequent creditor on one of the properties(Boehmers, on the Glencairn property) - urge must be taken. The other major creditors, TD Bank and Canada Trust, who areowed approximately $20,000,000 between them, take no position on the motion.

11 The Court has the power to appoint a receiver or receiver and manager where it is "just or convenient" to do so: the Courtsof Justice Act, R.S.O. 1990, c. 43, s. 101. In deciding whether or not to do so, it must have regard to all of the circumstancesbut in particular the nature of the property and the rights and interests of all parties in relation thereto. The fact that the movingparty has a right under its security to appoint a receiver is an important factor to be considered but so, in such circumstances,is the question of whether or not an appointment by the Court is necessary to enable the receiver-manager to carry out its workand duties more efficiently; see generally Third Generation Realty Ltd. v. Twigg (1991) 6 C.P.C. (3d) 366 (Ont. Gen. Div.) atpages 372-374; Confederation Trust Co. v. Dentbram Developments Ltd. (1992), 9 C.P.C. (3d) 399 (Ont. Gen. Div.); RoyalTrust Corp. of Canada v. D.Q. Plaza Holdings Ltd. (1984), 54 C.B.R. (N.S.) 18 (Sask. Q.B.) at page 21. It is not essential thatthe moving party, a secured creditor, establish that it will suffer irreparable harm if a receiver-manager is not appointed: SwissBank Corp. (Canada) v. Odyssey Industries Inc. (1995), 30 C.B.R. (3d) 49 (Ont. Gen. Div. [Commercial List]).

12 The Defendants and the opposing creditor argue that the Bank can perfectly effectively exercise its private remedies andthat the Court should not intervene by giving the extraordinary remedy of appointing a receiver when it has not yet done so andthere is no evidence its interest will not be well protected if it did. They also argue that a Court appointed receiver will be morecostly than a privately appointed one, eroding their interests in the property.

13 While I accept the general notion that the appointment of a receiver is an extraordinary remedy, it seems to me thatwhere the security instrument permits the appointment of a private receiver - and even contemplates, as this one does, thesecured creditor seeking a court appointed receiver - and where the circumstances of default justify the appointment of a privatereceiver, the "extraordinary" nature of the remedy sought is less essential to the inquiry. Rather, the "just or convenient" questionbecomes one of the Court determining, in the exercise of its discretion, whether it is more in the interests of all concernedto have the receiver appointed by the Court or not. This, of course, involves an examination of all the circumstances which Ihave outlined earlier in this endorsement, including the potential costs, the relationship between the debtor and the creditors,the likelihood of maximizing the return on and preserving the subject property and the best way of facilitating the work andduties of the receiver-manager.

14 Here I am satisfied on balance it is just and convenient for the order sought to be made. The Defendants have been

attempting to refinance the properties for 1 1 /2 years without success, although a letter from Mutual Trust dated yesterday

suggests (again) the possibility of a refinancing in the near future. The Bank and the debtors are deadlocked and I infer fromthe history and evidence that the Bank's attempts to enforce its security privately will only lead to more litigation. Indeed, thedebtor's solicitors themselves refer to the prospect of "costly, protracted and unproductive" litigation in a letter dated March 21stof this year, should the Bank seek to pursue its remedies. More significantly, the parties cannot agree on the proper approach tobe taken to marketing the properties which everyone agrees must be sold. Should it be on a unit by unit conversion condominiumbasis (as the debtor proposes) or on an en bloc basis as the Bank would prefer? A Court appointed receiver with a mandateto develop a marketing plan can resolve that impasse, subject to the Court's approval, whereas a privately appointed receiverin all likelihood could not, at least without further litigious skirmishing. In the end, I am satisfied the interests of the debtors





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themselves, along with those of the creditors (and the tenants, who will be caught in the middle) and the orderly disposition ofthe property are all better served by the appointment of the receiver-manager as requested.

15 I am prepared, in the circumstances, however, to render the debtors one last chance to rescue the situation, if they canbring the potential Mutual Trust refinancing to fruition. I postpone the effectiveness of the order appointing Doane Raymondas receiver-manager for a period of three weeks from this date. If a refinancing arrangement which is satisfactory to the Bankand which is firm and concrete can be arranged by that time, I may be spoken to at a 9:30 appointment on Monday, June 24,1996 with regard to a further postponement. The order will relate back to today's date, if taken out.

16 Should the Bank be advised to appoint Doane Raymond as a private receiver/manager under its mortgages in the interim,it may do so.

17 Counsel may attend at an earlier 9:30 appointment if necessary to speak to the form of the order.Motions granted.

End of Document Copyright © Thomson Reuters Canada Limited or its licensors (excluding individual court documents). All rights

reserved.

TAB 2

Elleway Acquisitions Ltd. v. Cruise Professionals Ltd., 2013 ONSC 6866, 2013...

2013 ONSC 6866, 2013 CarswellOnt 16639, 235 A.C.W.S. (3d) 683


2013 ONSC 6866Ontario Superior Court of Justice [Commercial List]

Elleway Acquisitions Ltd. v. Cruise Professionals Ltd.

2013 CarswellOnt 16639, 2013 ONSC 6866, 235 A.C.W.S. (3d) 683

Elleway Acquisitions Limited, Applicant and The CruiseProfessionals Limited, 4358376 Canada Inc. (Operating asItravel2000.com) and 7500106 Canada Inc., Respondents

Morawetz J.

Heard: November 4, 2013Judgment: November 4, 2013Docket: CV-13-10320-00CL

Counsel: Jay Swartz, Natalie Renner, for ApplicantJohn N. Birch, for RespondentsDavid Bish, Lee Cassey, for Grant Thornton, Proposed Receiver

Subject: Civil Practice and Procedure; Corporate and Commercial; Insolvency

Table of Authorities

Cases considered by Morawetz J.:

Anderson v. Hunking (2010), 2010 CarswellOnt 5191, 2010 ONSC 4008 (Ont. S.C.J.) — referred to

Bank of Montreal v. Carnival National Leasing Ltd. (2011), 74 C.B.R. (5th) 300, 2011 ONSC 1007, 2011 CarswellOnt896 (Ont. S.C.J.) — referred to

Bank of Nova Scotia v. Freure Village on Clair Creek (1996), 1996 CarswellOnt 2328, 40 C.B.R. (3d) 274 (Ont. Gen.Div. [Commercial List]) — referred to

Canadian Tire Corp. v. Healy (2011), 2011 ONSC 4616, 2011 CarswellOnt 7430, 81 C.B.R. (5th) 142 (Ont. S.C.J.[Commercial List]) — referred to

Textron Financial Canada Ltd. v. Chetwynd Motels Ltd. (2010), 67 C.B.R. (5th) 97, 91 C.P.C. (6th) 171, 2010CarswellBC 855, 2010 BCSC 477 (B.C. S.C. [In Chambers]) — referred to

Morawetz J.:

1 At the conclusion of argument, the requested relief was granted with reasons to follow. These are the reasons.

2 Elleway Acquisitions Limited ("Elleway" or the "Applicant") seeks an order (the "Receivership Order") appointing GrantThornton Limited ("GTL") as receiver (the "Receiver"), without security, of all of the property, assets and undertaking ofeach of 4358376 Canada Inc., (operating as itravel2000.com ("itravel")), 7500106 Canada Inc., ("Travelcash"), and The CruiseProfessionals ("Cruise") and together with itravel and Travelcash, "itravel Canada"), pursuant to section 243 of the Bankruptcyand Insolvency Act (Canada) (the "BIA") and section 101 of the Courts of Justice Act (Ontario) (the "CJA").











3 The application was not opposed.

4 The itravel Group (as defined below) is indebted to Elleway in the aggregate principal amount of £17,171,690 pursuantto a secured credit facility that was purchased by Elleway and a working capital facility that was established by Elleway. Theindebtedness is guaranteed by each of itravel, Cruise and Travelcash, among others. The itravel Group is in default of the creditfacility and the working capital facility, and Elleway has demanded repayment of the amounts owing thereunder. Elleway hasalso served each of itravel, Cruise and Travelcash with a notice of intention to enforce its security under section 244(1) ofthe BIA. Each of itravel, Cruise and Travelcash has acknowledged its inability to pay the indebtedness and consented to earlyenforcement pursuant to section 244(2) of the BIA.

5 Counsel to the Applicant submits that the itravel Group is insolvent and suffering from a liquidity crisis that is jeopardizingthe itravel Group's continued operations. Counsel to the Applicant submits that the appointment of a receiver is necessary toprotect itravel Canada's business and the interests of itravel Canada's employees, customers and suppliers.

6 Counsel further submits that itravel Canada's core business is the sale of travel services, including vacation, flight, hotel, carrentals, and insurance packages offered by third parties, to its customers. itravel Canada's business is largely seasonal and themajority of its revenues are generated in the months of October to March. itravel Canada would have to borrow approximately£3.1 million to fund its operations during this period and it is highly unlikely that another lender would be prepared to advanceany funds to itravel Canada at this time given its financial circumstances.

7 Further, counsel contends that the Canadian travel agent business is an intensely competitive industry with a high profileamong consumers, making it very easy for consumers to comparison shop to determine which travel agent can provide services atthe lowest possible cost. Given its visibility in the consumer market and the travel industry, counsel submits that it is imperativethat itravel Canada maintain existing goodwill and the confidence of its customers. If itravel Canada's business is to survive,potential customers must be assured that the business will continue uninterrupted and their advance payments for vacations willbe protected notwithstanding itravel Canada's financial circumstances.

8 Therefore, counsel submits that, if a receiver is not appointed at this critical juncture, there is a substantial risk that itravelCanada will not be able to book trips and cruises during its most profitable period. This will result in a disruption to or, evenworse, a complete cessation of itravel Canada's business. Employees will resign, consumer confidence will be lost and existinggoodwill will be irreparably harmed.

9 It is contemplated that if GTL is appointed as the Receiver, GTL intends to seek the Court's approval of the sale ofsubstantially all of itravel Canada's assets to certain affiliates of Elleway, who will operate the business of itravel Canada as agoing concern following the consummation of the purchase transactions. Counsel submits that, it is in the best interests of allstakeholders that the Receivership Order be made because it will facilitate a going concern sale of itravel Canada's business,preserving consumer confidence, existing goodwill and the jobs of over 250 employees.

10 Elleway is a corporation incorporated under the laws of the British Virgin Islands. Elleway is an indirect wholly ownedsubsidiary of The Aldenham Grange Trust, a discretionary trust governed under Jersey law.

11 itravel, Cruise and Travelcash are indirect wholly owned subsidiaries of Travelzest plc ("Travelzest"), a publicly tradedUnited Kingdom ("UK") company that operates a group of companies that includes itravel Canada (the "itravel Group"). Theitravel Group's UK operations were closed in March 2013. Since the cessation of the itravel Group's UK operations, all of theitravel Group's remaining operations are based in Canada. itravel Canada currently employs approximately 255 employees.itravel Canada's employees are not represented by a union and it does not sponsor a pension plan for any of its employees.

12 The itravel Group's primary credit facilities (the "Credit Facilities") were extended by Barclays Bank PLC ("Barclays")pursuant to a credit agreement (the "Credit Agreement") and corresponding fee letter (the "Fee Letter" and together with theCredit Agreement, the "Credit Facility Documents") under which Travelzest is the borrower.




13 Pursuant to a series of guarantees and security documents (the "Security Documents"), each of Travelzest, TravelzestCanco, Travelzest Holdings, Itravel, Cruise and Travelcash guaranteed the obligations under the Credit Facility Documentsand granted a security interest over all of its property to secure such obligations (the "Credit Facility Security"). TravelzestCanco and Travelzest Holdings are direct wholly owned UK subsidiaries of Travelzest. In addition, itravel and Cruise granteda confirmation of security interest in certain intellectual property (the "IP Security Confirmation and together with the CreditFacility Security, the "Security").

14 The Security Documents provide the following remedies, among others, to the secured party, upon the occurrence of anevent of default under the Credit Facility Documents: (a) the appointment by instrument in writing of a receiver; and (b) theinstitution of proceedings in any court of competent jurisdiction for the appointment of a receiver. The Security Documents donot require Barclays to look to the property of Travelzest before enforcing its security against the property of itravel Canadaupon the occurrence of an event of default.

15 Commencing on or about April 2012, the itravel Group began to default on its obligations under the Credit Agreement.

16 Pursuant to a series of letter agreements, Barclays agreed to, among other things, defer the applicable payment instalmentsdue under the Credit Agreement until July 12, 2013 (the "Repayment Date"). Travelzest failed to pay any amounts to Barclayson the Repayment Date. Travelzest's failure to comply with financial covenants and its default on scheduled payments underthe Repayment Plans constitute events of default under the Credit Facility Documents.

17 Since 2010, Itravel Canada has attempted to refinance its debt through various methods, including the implementationof a global restructuring plan and the search for a potential purchaser through formal and informal sales processes. Two formalsales processes yielded some interest from prospective purchasers. Ultimately, however, neither sales process generated a viableoffer for Itravel Canada's assets or the shares of Travelzest.

18 Counsel submits that GTL has been working to familiarize itself with the business operations of Itravel Canada sinceAugust 2013 and that GTL is prepared to act as the Receiver of all of the property, assets and undertaking of itravel Canada.

19 Counsel further submits that, if appointed as the Receiver, GTL intends to bring a motion (the "Sales Approval Motion")seeking Court approval of certain purchase transactions wherein Elleway, through certain of its affiliates, 8635919 Canada Inc.(the "itravel Purchaser"), 8635854 Canada Inc. (the "Cruise Purchaser") and 1775305 Alberta Ltd. (the "Travelcash Purchaser"and together with the itravel Purchaser and the Cruise Purchaser, the "Purchasers"), will acquire substantially all of the assetsof itravel Canada (the "Purchase Transactions").

20 If the Purchase Transactions are approved, Elleway has agreed to fund the ongoing operations of itravel Canada duringthe receivership. It is the intention of the parties that the Purchase Transactions will close shortly after approval by the Courtand it is not expected that the Receiver will require significant funding.

21 The purchase price for the Purchase Transactions will be comprised of cash, assumed liabilities and a cancellation of aportion of the Indebtedness. Elleway will supply the cash portion of the purchase price under each Purchase Transaction, whichwill be sufficient to pay any prior ranking secured claim or priority claim that is not being assumed.

22 The Purchasers intend to offer substantially all of the employees of itravel and Cruise the opportunity to continue theiremployment with the Purchasers.

23 This motion raises the issue as to whether the Court should make an order pursuant to section 243 of the BIA and section101 of the CJA appointing GTL as the Receiver.

1. The Court Should Make the Receivership Order

a. The Test for Appointing a Receiver under the BIA and the CJA




24 Section 243(1) of the BIA authorizes a court to appoint a receiver where such appointment is "just or convenient".

25 Similarly, section 101(1) of the CJA provides for the appointment of a receiver by interlocutory order where theappointment is "just or convenient".

26 In determining whether it is just and convenient to appoint a receiver under both statutes, a court must have regard to allof the circumstances of the case, particularly the nature of the property and the rights and interests of all parties in relation tothe property. See Bank of Nova Scotia v. Freure Village on Clair Creek, [1996] O.J. No. 5088 (Ont. Gen. Div. [CommercialList]) at para. 10

27 Counsel to the Applicant submits that where the security instrument governing the relationship between the debtorand the secured creditor provides for a right to appoint a receiver upon default, this has the effect of relaxing the burden onthe applicant seeking to have the receiver appointed. Further, while the appointment of a receiver is generally regarded as anextraordinary equitable remedy, courts do not regard the nature of the remedy as extraordinary or equitable where the relevantsecurity document permits the appointment of a receiver. This is because the applicant is merely seeking to enforce a term of anagreement that was assented to by both parties. See Textron Financial Canada Ltd. v. Chetwynd Motels Ltd., 2010 BCSC 477,[2010] B.C.J. No. 635 (B.C. S.C. [In Chambers]) at paras. 50 and 75; Freure Village, supra, at para. 12; Canadian Tire Corp.v. Healy, 2011 ONSC 4616, [2011] O.J. No. 3498 (Ont. S.C.J. [Commercial List]) at para. 18; Bank of Montreal v. CarnivalNational Leasing Ltd., 2011 ONSC 1007, [2011] O.J. No. 671 (Ont. S.C.J.) at para. 27. I accept this submission.

28 Counsel further submits that in such circumstances, the "just or convenient" inquiry requires the court to determinewhether it is in the interests of all concerned to have the receiver appointed by the court. The court should consider the followingfactors, among others, in making such a determination:

(a) the potential costs of the receiver;

(a) the relationship between the debtor and the creditors;

(b) the likelihood of preserving and maximizing the return on the subject property; and

(c) the best way of facilitating the work and duties of the receiver.

See Freure Village, supra, at paras. 10-12; Canada Tire, supra, at para. 18; Carnival National Leasing, supra, at paras 26-29;Anderson v. Hunking, 2010 ONSC 4008, [2010] O.J. No. 3042 (Ont. S.C.J.) at para. 15.

29 Counsel to the Applicant submits that it is just and convenient to appoint GTL as the Receiver in the circumstances ofthis case. As described above, the itravel Group has defaulted on its obligations under the Credit Agreement and the Fee Letter.Such defaults are continuing and have not been remedied as of the date of this Application. This has given rise to Elleway'srights under the Security Documents to appoint a receiver by instrument in writing and to institute court proceedings for theappointment of a receiver.

30 It is submitted that it is just and convenient, or in the interests of all concerned, for the Court to appoint GTL as theReceiver for five main reasons:

(a) the potential costs of the receivership will be borne by Elleway;

(a) the relationships between itravel Canada and its creditors, including Elleway, militate in favour of appointing GTLas the Receiver;

(b) appointing GTL as the Receiver is the best way to preserve itravel Canada's business and maximize value for allstakeholders;

(c) appointing GTL as the Receiver is the best way to facilitate the work and duties of the Receiver; and











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(d) all other attempts to refinance itravel Canada's debt or sell its assets have failed.

31 It is noted that Elleway has also served a notice of intention to enforce security under section 244(1) of the BIA. itravelCanada has acknowledged its inability to pay the Indebtedness and consented to early enforcement pursuant to section 244(2)of the BIA.

32 Further, if GTL is appointed as the Receiver and the Purchase Transactions are approved, the Purchasers will assumesome of itravel Canada's liabilities and cancel a portion of the Indebtedness. Therefore, counsel submits that the appointmentof GTL as the Receiver is beneficial to both itravel Canada and Elleway.

33 Counsel also points out that if GTL is appointed as the Receiver and the Purchase Transactions are approved by the Court,the business of itravel Canada will continue as a going concern and the jobs of substantially all of itravel Canada's employeeswill be saved.

34 Having considered the foregoing, I am of the view that the Applicant has demonstrated that it is both just and convenientto appoint GTL as Receiver of itravel Canada under both section 243 of the BIA and section 101 of the CJA. The Applicationis granted and the order has been signed in the form presented.


reserved.

TAB 3

Governors of Dalhousie College at Halifax v. Boutilier Estate, 1934 CarswellNS 43

1934 CarswellNS 43, [1934] 3 D.L.R. 593, [1934] S.C.R. 642, 95 A.L.R. 1298


1934 CarswellNS 43The Supreme Court of Canada

Governors of Dalhousie College at Halifax v. Boutilier Estate


The Governors of Dalhousie College at Halifax (Claimant),Appellant and The Estate of Arthur Boutilier, Deceased, Respondent

Duff C.J. and Rinfret, Cannon, Crocket and Hughes JJ.

Judgment: May 7, 1934Judgment: May 8, 1934

Judgment: June 15, 1934

Proceedings: On Appeal from the Supreme Court of Nova Scotia en Banc

Counsel: G.W. Mason K.C. and W.C. Macdonald K.C. for the appellantC.B. Smith K.C. for the respondent.

Subject: Contracts; Public

The judgment of the court was delivered by Crocket, J.:

1 This appeal concerns a claim which was filed in the Probate Court for the County of Halifax, Nova Scotia, in the year 1931,by the appellant College against the respondent Estate for $5,000, stated as having been "subscribed to Dalhousie CampaignFund (1920)", and attested by an affidavit of the College Bursar, in which it was alleged that the stated amount was justly andtruly owing to the College Corporation.

2 The subscription, upon which the claim was founded, was obtained from the deceased on June 4, 1920, in the course of acanvass which was being conducted by a committee, known as the Dalhousie College Campaign Committee, for the raising ofa fund to increase the general resources and usefulness of the institution and was in the following terms:

For the purpose of enabling Dalhousie College to maintain and improve the efficiency of its teaching, to construct newbuildings and otherwise to keep pace with the growing need of its constituency and in consideration of the subscription ofothers, I promise to pay to the Treasurer of Dalhousie College the sum of Five Thousand Dollars, payment as follows:

Terms of payment as per letter from Mr. Boutilier.

A. 399.

Name Arthur Boutilier.

Date June 4th, 1920.

Make all cheques payable to the Treasurer of Dalhousie College.

3 So far as the record discloses, the subscription was not accompanied or followed by any letter from the deceased as to theterms of payment. He died on October 29, 1928, without making any payment on account. It appears that some time after hesigned the subscription form he met with severe financial reverses which prevented him from honouring his pledge. That hedesired and hoped to be able to do so is evidenced by a brief letter addressed by him to the President of the University on April




12, 1926, in reply to a communication from the latter, calling his attention to the subscription and the fact that no payments hadbeen made upon it. The deceased's letter, acknowledging receipt of the President's communication, states:

In reply I desire to advise you that I have kept my promise to you in mind. As you are probably aware, since making mypromise I suffered some rather severe reverses, but I expect before too long to be able to redeem my pledge.

4 The claim was contested in the Probate Court by the Estate on two grounds, viz.: that in the absence of any letter from thedeceased as to terms of payment, the claimant could not recover; and that the claim was barred by the Statute of Limitations.Dr. A. Stanley MacKenzie, who had retired from the Presidency of the University after 20 years' service shortly before the trial,and others gave evidence before the Registrar of Probate. Basing himself apparently upon Dr. MacKenzie's statement that inconsideration of the moneys subscribed in the campaign referred to, large sums of money were expended by the College onthe objects mentioned in the subscription card, between the years 1920 and 1931, the Registrar decided that there was a good

consideration for the deceased's sub scription, citing Sargent v. Nicholson, a decision of the Appeal Court of Manitoba 1 , and

Y.MC.A. v. Rankin, a decision of the Appeal Court of British Columbia 2 , and that no supplementary letter was necessary tocomplete the agreement. He further held that the deceased's letter of April 12, 1926, constituted a sufficient acknowledgementto take the case out of the Statute of Limitations.

5 An appeal to the Judge of the County Court sitting as Judge of the Probate Court was dismissed, but on a further appealto the Supreme Court of Nova Scotia en banc, this decision was reversed by the unanimous judgment of Chisholm, C.J., andMellish, Graham, Carroll and Ross, JJ., on the ground that the subscription was a mere nudum pactum, and that nothing wasshewn either by the document itself or by the evidence which imposed any binding contractual obligation upon the deceasedin connection therewith. This, I take it, to be the gist of the reasons for the judgment of the Appeal Court as delivered by thelearned Chief Justice, and embodies the whole problem with which we have now to deal.

6 There is, of course, no doubt that the deceased's subscription can be sustained as a binding promise only upon one basis,viz.: as a contract, supported by a good and sufficient consideration. The whole controversy between the parties is as to whethersuch a consideration is to be found, either in the subscription paper itself or in the circumstances as disclosed by the evidence.

7 So far as the signed subscription itself is concerned, it is contended in behalf of the appellant that it shews upon itsface a good and sufficient consideration for the deceased's promise in its statement that it was given in consideration of thesubscription of others. As to this, it is first to be observed that the statement of such a consideration in the subscription paperis insufficient to support the promise if, in point of law, the subscriptions of others could not provide a valid considerationtherefor. I concur in the opinion of Chisholm, C.J., that the fact that others had signed separate subscription papers for the samecommon object or were expected so to do does not of itself constitute a legal consideration. Although there have been somecases in the United States in which a contrary opinion has been expressed, these decisions have been rejected as unsound inprinciple both by the Supreme Court of Massachusetts and the Court of Appeals of the State of New York. See Cottage Street

M.E. Church v. Kendall 3 ; Hamilton College v. Stewart 4 ; and Albany Presbyterian Church v. Cooper 5 . In the last mentionedcase the defendant's intestate subscribed a paper with a number of others, by the terms of which they "in consideration of onedollar" to each of them paid "and of the agreements of each other" severally promised and agreed to and with the plaintiff'strustees to pay to said trustees the sums severally subscribed for the purpose of paying off a mortgage debt on the church edificeon the condition that the sum of $45,000 in the aggregate should be subscribed and paid in for such purpose within one year. TheCourt of Appeals held that it must reject the consideration recited in the subscription paper, the money consideration, becauseit had no basis in fact, and the mutual promise between the subscribers, because there was no privity of contract between theplaintiff church and the various subscribers.

8 A perusal of the reasons for judgment of the Appeal Court of Manitoba, as delivered by Cameron, J.A., in Sargent v.

Nicholson 6 , already referred to, shews that that court also rejected the contention that it was a sufficient consideration thatothers were led to subscribe by the subscription of the defendant. In fact Cameron, J.A.'s opinion quotes with approval a

passage from the opinion of Gray, C.J., in Cottage Street M.E Church v. Kendall 7 , that such a proposition appeared to theMassachusetts Supreme Court to be "inconsistent with elementary principles." The decision of the Appeal Court of British




Columbia in Y.M.C.A. v. Rankin 8 fully adopted the opinion of Cameron, J.A., in Sargent v. Nicholson 9 , and is certainly noauthority for the acceptance of other sub scriptions as a binding consideration in such a case as the present one.

9 The doctrine of mutual promises was also put forward on the argument as a ground upon which the deceased's promisemight be held to be binding. It was suggested that the statement in the subscription of the purpose for which it was made, viz.:"of enabling Dalhousie College to maintain and improve the efficiency of its teaching, to construct new buildings and otherwiseto keep pace with the growing need of its constituency," constituted an implied request on the part of the deceased to apply thepromised subscription to this object and that the acceptance by the College of his promise created a contract between them, theconsideration for the promise of the deceased to pay the money being the promise of the College to apply it to the purpose stated.

10 I cannot think that any such construction can fairly be placed upon the subscription paper and its acceptance by theCollege. It certainly contains no express request to the College either "to maintain and improve the efficiency of its teaching"or "to construct new buildings and otherwise to keep pace with the growing need of its constituency," but simply states thatthe promise to pay the $5,000 is made for the purpose of enabling the College to do so, leaving it perfectly free to pursue whathad always been its aims in whatever manner its Governors should choose. No statement is made as to the amount intendedto be raised for all or any of the purposes stated. No buildings of any kind are described. The construction of new buildingsis merely indicated as a means of the College keeping pace with the growing need of its constituency and apparently to beundertaken as and when the Governors should in their unfettered discretion decide the erection of any one or more buildingsfor any purpose was necessary or desirable.

11 It seems to me difficult to conceive that, had the deceased actually paid the promised money, he could have safelyrelied upon the mere acceptance of his own promise, couched in such vague and uncertain terms regarding its purpose, as thefoundation of any action against the College Corporation.

12 So far as I can discover, there is no English or Canadian case in which it has been authoritatively decided that a reciprocalpromise on the part of the promisee may be implied from the mere fact of the acceptance by the promisee of such a subscriptionpaper from the hands of the promisor to do the thing for which the subscription is promised. There is no doubt, of course, thatan express agreement by the promisee to do certain acts in return for a subscription is a sufficient consideration for the promiseof the subscriber. There may, too, be circumstances proved by evidence, outside the subscription paper itself, from which sucha reciprocal promise on the part of the promisee may well be implied, but I have not been able to find any English or Canadiancase where it has actually been so decided in the absence of proof that the subscriber has himself either expressly requestedthe promisee to undertake some definite project or personally taken such a part in connection with the projected enterprise thatsuch a request might be inferred therefrom.

13 It is true that there are expressions in the judgments of the Manitoba Court of Appeal in Sargent v. Nicholson 10 and

of Wright, J., of the Supreme Court of Ontario, in Re Loblaw 11 , which seem to support the proposition that a request fromthe promisor to the promisee may be implied from the mere statement in the subscription paper of the object for which thesubscription is promised and a reciprocal promise from the promisee to the promisor to carry out that purpose from the merefact of the acceptance of the subscription, but an examination of both these judgments makes it clear that these expressions ofopinion do not touch the real ground upon which either of the decisions proceeds.

14 There is no doubt either that some American courts have held that by acceptance of the subscription paper itself thepromisee impliedly undertakes to carry out the purpose for which the subscription is made and treated this implied promise of thepromisee as the consideration for the promise to pay. This view, however, has been rejected, as pointed out in 60 Corpus Juris,959, on the ground that the promise implied in the acceptance involves no act advantageous to the subscriber or detrimental tothe beneficiary, and hence does not involve a case of mutual promises and that the duty of the payee would arise from trusteeship

rather than a contractual promise, citing Albany Presbyterian Church v. Cooper 12 , above referred to. No suggestion of mutualpromises was made in the last named case, notwithstanding that the subscription there involved was expressly stated to be forthe single purpose of erecting a designated church building; neither was it made in the leading New York case of Barnes v.

Perine 13 , where the subscription was also stated to be for the erection of a specific church edifice.




15 As to finding the consideration for the subscription outside the subscription itself, the only evidence relied upon is thatof Dr. MacKenzie that increased expenditures were made by the College for the purposes stated between the years 1920 and1931 on the strength of the subscriptions obtained in the canvass of 1920. It is contended that this fact alone constituted a

consideration for the subscription and made it binding. The decisions in Sargent v. Nicholson 14 ; Y.M.C.A. v. Rankin 15 ; and

the judgment of Wright, J., of the Supreme Court of Ontario, in Re Loblaw 16 , adopting the two former decisions, are relied

upon to sustain this proposition as well as some earlier Ontario cases: Hammond v. Small 17 ; Thomas v. Grace 18 ; Anderson v.

Kilborn 19 ; and Berkeley Street Church v. Stevens 20 , and several American decisions.

16 There seems to be no doubt that the first three cases above mentioned unqualifiedly support the proposition relied upon, asregards at least a subscription for a single distinct and definite object, such as the erection of a designated building, whether ornot the expenditure would not have been made nor any liability incurred by the promisee but for the promise or not. The earlierOntario cases relied upon, however, do not appear to me to go that far. They all shew that there was either a direct personalinterest on the part of the subscriber in the particular project undertaken or some personal participation in the action of thepromisee as a result of which the expenditure or liability was incurred.

17 Regarding the American decisions, upon which Sargent v. Nicholson 21 appears to have entirely proceeded — more

particularly perhaps on the dictum of Gray, C.J., in Cottage Street M.E. Church v. Kendall 22 than any other — it may bepointed out that there are other American cases which shew that there must be something more than the mere expenditure of

money or the incurring of liability by the promisee on the faith of the promise. Hull v. Pearson 23 , a decision of the AppellateDivision of the Supreme Court of New York, in which many of the American cases are reviewed, should perhaps be mentionedin this regard. One W. subscribed a certain sum for the work of the German department of a theological seminary. There wasno consideration expressed in the memorandum, and there was no evidence of a request on the part of W. that the work shouldbe continued, or of any expenditures on the part of the theological seminary in reliance on such request. Such department hadbeen continued, but there was no evidence that it would not have been continued as it had been for a series of years but forthe subscription. It was held that the subscription was without consideration and could not be enforced. Woodward, J., in thecourse of his reasons, in which the full court concurred, said:

It is true that there is evidence that the German department has been continued, but this does not meet the requirement.There is no evidence that it would not have been continued as it had been for a series of years if the subscription of Mr.Wild had not been made.

And further:

He undoubtedly made the subscription for the purpose of aiding in promoting the work of the German department; but,in the absence of some act or word which clearly indicated that he accompanied his subscription by a request to dosomething which the corporation would not have done except for his subscription, there is no such request as would justifya constructive consideration in support of this promise.

18 These latter dicta seem to accord more with the English decisions, which give no countenance to the principle applied

in Sargent v. Nicholson 24 and Y.M.C.A. v. Rankin 25 and in the earlier American cases, as is so pointedly illustrated by the

judgments of Pearson, J., in In Re Hudson 26 , and Eve, J., in In Re Cory 27 . The head note in In Re Hudson 28 states:

A. verbally promised to give £20,000 to the Jubilee Fund of the Congregational Union, and also filled up and signed ablank form of promise not addressed to anyone, but headed "Congregational Union of England and Wales Jubilee Fund,"whereby he promised to give £20,000, in five equal annual instalments of £4,000 each, for the liquidation of chapel debts.A. paid three instalments of £4,000 to the fund within three years from the date of his promise, and then died, leaving theremaining two instalments unpaid and unprovided for.




The Congregational Union claimed £8,000 from A.'s executors, on the ground that they had been led by A.'s promise tocontribute larger sums to churches than they would otherwise have done; that money had been given and promised byother persons in consequence of A.'s promise; that grants from the Jubilee Fund had been promised to cases recommendedby A.; and that churches to which promises had been made by the committee, and the committee themselves, had incurredliabilities in consequence of A.'s promise.

19 His Lordship held there was no consideration for the promise. "There really was," he said, "in this matter, nothing whateverin the shape of a consideration which could form a contract between the parties."

20 And he added:

I am bound to say that this is an attempt to turn a charity into something very different from a charity. I think it oughtto fail, and I think it does fail. I do not know to what extent a contrary decision might open a new form of posthumouscharity. Posthumous charity is already bad enough, and it is quite sufficiently protected by law without establishing a newprinciple which would extend the doctrine in its favour far more than it has been extended or ought to be extended.

21 In the Cory case 29 a gift of 1,000 guineas was promised to a Y.M.C. Association for the purpose of building a memorialhall. The sum required was £150,000, of which £85,000 had been promised or was available. The committee in charge decidednot to commit themselves until they saw that their efforts to raise the whole fund were likely to prove successful. The testator,whose estate it was sought to charge, promised the 1,000 guineas and subsequently the committee felt justified in entering intoa building contract, which they alleged they were largely induced to enter into by the testator's promise. Eve, J., held there wasno contractual obligation between the parties and therefore no legal debt due from the estate.

22 Chisholm, C.J., in the case at bar, said that without any want of deference to eminent judges who have held otherwisehe felt impelled to follow the decisions in the English cases. I am of opinion that he was fully justified in so doing, rather than

apply the principle contended for by the appellant in reliance upon the decision in Sargent v. Nicholson 30 , based, as the lattercase is, upon the decisions of United States courts, which are not only in conflict with the English cases, but with decisionsof the Court of Appeals of the State of New York, as I have, I think, shewn, and which have been subjected to very strongcriticism by American legal authors, notably by Prof. Williston, as the learned Chief Justice of Nova Scotia has shewn in hisexhaustive and, to my mind, very convincing judgment.

23 To hold otherwise would be to hold that a naked, voluntary promise may be converted into a binding legal contract bythe subsequent action of the promisee alone without the consent, express or implied, of the promisor. There is no evidence herewhich in any way involves the deceased in the carrying out of the work for which the promised subscription was made otherthan the signing of the subscription paper itself.

24 I may add that, had I come to the opposite conclusion upon the legal question involved, I should have felt impelled, asChisholm, C.J., did, to seriously question the accuracy of the statement relied upon by the appellant that "this work was doneand the increased expenditures were made on the strength of the subscriptions promised," if that statement was meant to referto all the increased expenditures listed in the comparative statements produced by Dr. MacKenzie. The statement relied on doesnot profess to set out verbatim the language of the witness. The record of the evidence is apparently but a brief summary takendown by the Registrar. That the summary is inaccurate was shewn by the admission made on the argument before us that itwas not $220,000 which was subscribed in all in 1920, but $2,200,000. The statement produced of expenditures on buildings,grounds and equipment since 1920 shews a grand total for the more than ten years of but $1,491,687 — over $700,000 lessthan the aggregate of the 1920 campaign subscriptions — and this grand total includes over $400,000 for Shirriff Hall, whichit is well known was the object of a special donation contributed by a wealthy lady, now deceased, as a memorial to her father.In the light of this correction it becomes quite as difficult to believe that the College Corporation, in doing "this work" andmaking "the increased expenditures" did so in reliance upon the deceased's subscription, as if the aggregate of the subscriptionshad been but $220,000, as the Registrar took the figures down, and the Nova Scotia Supreme Court supposed, and the total




expenditures $1,491,687. This evidence would assuredly seem to shut out all possibility of establishing a claim against thedeceased's estate on any such ground as estoppel.

25 The appeal, I think, should be dismissed with costs.Appeal dismissed with costs.

Solicitors of record:Solicitor for the appellant: W.C. Macdonald.Solicitor for the respondent: Thomas Notting.

Footnotes1 (1915) 25 D.L.R. 638, 26 Man. L.R. 53, 9 W.W.R. 883.

2 (1916) 27 D.L.R. 417; 22 B.C. Rep. 588; 10 W.W.R. 482.

3 (1877) 121 Mass. 528.

4 (1848) 1 N.Y. Rep. 581.

5 (1889) 112 N.Y. Rep. 517.

6 (1915) 25 D.L.R. 638, 26 Man. L.R. 53, 9 W.W.R. 883.

7 (1877) 121 Mass. 528.

8 (1916) 27 D.L.R. 417; 22 B.C. Rep. 588; 10 W.W.R. 482.

9 1915) 25 D.L.R. 638, 26 Man. L.R. 53, 9 W.W.R. 883.

10 (1915) 25 D.L.R. 638, 26 Man. L.R. 53, 9 W.W.R. 883.

11 [1933] 4 D.L.R. 264, [1933] O.R. 764.

12 (1889) 112 N.Y. Rep. 517.

13 (1854) 2 Kernan's Rep. (12 N.Y. Appeals) 18.

14 (1915) 25 D.L.R. 638, 26 Man. L.R. 53, 9 W.W.R. 883.

15 (1916) 27 D.L.R. 417; 22 B.C. Rep. 588; 10 W.W.R. 482.

16 [1933] 4 D.L.R. 264, [1933] O.R. 764.

17 (1858) 16 U.C.Q.B. 371.

18 (1865) 15 U.C.C.P. 462.

19 (1875) 22 Grant's Ch. Reports, 385.

20 (1875) 37 U.C.Q.B. 9.

21 (1915) 25 D.L.R. 638, 26 Man. L.R. 53, 9 W.W.R. 883.

22 (1877) 121 Mass. 528.

23 (1899) 56 N.Y. Sup., 518.

24 (1915) 25 D.L.R. 638, 26 Man. L.R. 53, 9 W.W.R. 883.

25 (1916) 27 D.L.R. 417; 22 B.C. Rep. 558; 10 W.W.R. 482.

26 (1885) 33 W.R. 819.

27 (1912) 29 T.L.R. 18

28 (1885) 33 W.R. 819.

29 (1912) 29 T.L.R. 18

30 (1915) 25 D.L.R. 638, 26 Man. L.R. 53, 9 W.W.R. 883.


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Court File No.: CV-14-10672-00CL

HERIDGE S.A.R.L. v. GREAT LAKES BIODIESEL INC. et al – Applicant Respondents

ONTARIO

SUPERIOR COURT OF JUSTICE

COMMERCIAL LIST

(PROCEEDING COMMENCED AT TORONTO)

BRIEF OF AUTHORITIES OF THE

RESPONDENTS

GOWLING LAFLEUR HENDERSON LLP

Barristers and Solicitors

1 First Canadian Place

100 King Street West, Suite 1600

TORONTO, Ontario

M5X 1G5

Clifton P. Prophet (LSUC #34845K) [email protected]

Nicholas Kluge (LSUC #44159T) [email protected]

Telephone: (416) 862-3509

Facsimile: (416) 862-7661

SOLICITORS FOR THE RESPONDENTS

