Law Times

Page 14 June 5, 2017 • Law Times www.lawtimesnews.com CASELAW alleged they could not return to Saudi Arabia was not, alone, suf- ficient to permit them to meet Convention definition. Chehade v. Canada (Min- ister of Citizenship and Immi- gration) (2017), 2017 Carswell- Nat 790, 2017 FC 282, Cecily Y. Strickland J. (F.C.). Ontario Civil Cases Bankruptcy and Insolvency COMPANIES' CREDITORS ARRANGEMENT ACT Arrangements Reopening sale and investment solicitation process would be unfair and foolhardy Applicants, group of insolvent steel companies, sought Compa- nies' Creditors Arrangement Act (CCAA) protection. Sale and in- vestment solicitation process (SISP) was authorized. E Global was deemed non-compliant bidder under SISP as it failed to prove it had adequate financial resources. In accordance with SISP, applicants accepted joint bid from approved joint bidders and brought motion for order approving asset purchase agree- ment (APA). Before motion was heard, one joint bidder decided not to proceed. Other joint bid- der sought to close transaction in partnership with certain senior noteholders of applicant. Union filed cross-motion to advance purported transaction with O Steel, entity owned by E Global. E Ltd. brought motion to reopen SISP. Union brought motion for directions as to whether it could engage in discussions with O Steel regarding potential sale. Motions dismissed. Re-opening SISP in circumstances would be unfair and foolhardy. There was no evidence E Global had finan- cial wherewithal to undertake asset purchase and no evidence of any interested, viable bidder. Fact that large percentage of se- nior noteholders replaced one of joint bidders made accepted bid more viable, not less reliable. There was no basis for order au- thorizing union to do anything with O Steel in current process. In Non-Disclosure Agreement signed by union, it was agreed that union needed applicants' consent to talk to SISP bidder and that bidder needed to be qualified SISP bidder. O Steel was not SISP bidder. Essar Steel Algoma Inc., Re (2017), 2017 CarswellOnt 4050, 2017 ONSC 1401, Newbould J. (Ont. S.C.J. [Commercial List]). DISCHARGE OF BANKRUPT Conditional discharge Student loan indebtedness discharged by assignment in bankruptcy Applicant obtained student loans for her first course of study in connection with Bach- elor of Science program. She obtained loan money between August 1996 and April 2001 and graduated in October 2004. In her second course of study, applicant attended college be- tween 2006 and 2007, but did not obtain student loans. Appli- cant left program in April 2007. Applicant filed assignment in bankruptcy on December 3, 2011. By virtue of s. 178(1)(g)(ii) of Bankruptcy and Insolvency Act ("BIA"), some student loan debt survives bankruptcy in certain circumstances. Student loan debt is not discharged by bankruptcy if bankruptcy oc- curred within seven years after person ceased being student. Applicant brought application seeking declaration that she ceased to be student with respect to her student loans in October 2004, and declaration that those student loans were discharged by virtue of applicant's assign- ment in bankruptcy. Applica- tion granted. Interpretation of s. 178(1)(g)(ii) must be guided by overall purpose of BIA, which was namely rehabilitating and reintegrating individuals to al- low for future participation in Canadian economy. Permitting bankrupt to discharge her debts after seven years from date of program to which student loan was connected goes some dis- tance in promoting intent and purpose of BIA, that is to pro- mote rehabilitation of debtors, providing them with fresh start while discouraging any abuse of bankruptcy system. For pur- poses of applicant's student loans, she ceased to be student in October 2004. Therefore, seven- year delay requirement had been met. Accordingly, applicant's in- debtedness for student loans ob- tained prior to October 1, 2004 was discharged by her assign- ment in bankruptcy. St. Dennis v. Ontario (Min- istry of Training, Colleges & Universities) (2017), 2017 Car- swellOnt 6316, 2017 ONSC 2417, Patricia C. Hennessy J. (Ont. S.C.J.). Business Associations LEGAL PROCEEDINGS INVOLVING BUSINESS ASSOCIATIONS Practice and procedure in proceedings involving corporations Plaintiffs' intention to pursue claim for uncapped liability without properly pleading manifestly unfair Plaintiffs brought statutory causes of action under Part XXIII.1 of Securities Act for misrepresentations in secondary market. It was alleged that em- ployees of corporate defendant bribed government officials with respect to certain projects and covered up bribes by manipulat- ing corporate financial records. It was alleged that revelation of falsity of information caused plummeting stock prices and over billion-dollar loss to plain- tiffs and class members. Several defendants were charged with criminal offences. Corporate defendant and 'outside director' defendants brought motion to strike paragraphs from plain- tiffs' amended reply pleadings. Outside director defendants and defendant MN brought motions to strike paragraphs from state- ment of defence of defendant BA. Motions granted. Plaintiffs' intention was to pursue claim for uncapped liability against certain defendants notwith- standing that this allegation was not found in their statement of claim. Reply thus offended rule against departures and was manifestly unfair and unau- thorized approach since no leave had been given for plaintiffs to commence this particular cause of action against defendants in question. Plaintiffs could not take cover by submitting that they were just pleading to re- but 'reasonable investigation defence' because such plea was unnecessary. There was dis- agreement with plaintiffs that it was not necessary to plead knowledge to expose defendants to uncapped liability; it was nec- essary material fact. Regarding RA's statement of defence, Part XXIII.1 of Securities Act does not provide for co-defendant to raise different allegations from those raised by plaintiff and from which leave has been grant- ed. Act, which is complete code, does not provide for co-defen- dant to be able to separately raise allegation of knowledge against another co-defendant. BA could not re-introduce twice-rejected allegations about bribery in Libya in guise of attack on his co-defendants' reasonable inves- tigation defence or to bolster his entitlements in apportionment of liability under s. 138.6 of Act. To allow impugned allegations in BA's statement of defence to stand would divert discoveries and trial into factual inquiries that ultimately had no connec- tion to real issue trial judge had to decide. Drywall Acoustic Lathing and Insulation, Local 675 Pen- sion Fund (Trustees of) v. SNC- Lavalin Group Inc. (2017), 2017 CarswellOnt 5228, 2017 ONSC 2188, Perell J. (Ont. S.C.J.). Civil Practice and Procedure DEFAULT PROCEEDINGS Application to set aside default judgment Motion to set aside default judgment denied Claim seeking $50,000 was per- sonally served on defendant S. S acknowledged to plaintiff that he owed $50,000, and he offered to make monthly payments over five years. S did not defend action and plaintiff obtained default judgment. Plaintiff personally delivered copy of judgment to S and he confirmed his indebted- ness. Plaintiff requested that S formalize repayment plan, S re- plied that he had passed request to solicitors, and he then failed to respond to plaintiff 's further inquiries. Garnishment materi- als were served on S. S brought motion to set aside default judg- ment. Motion dismissed. Mo- tion to set aside default judgment was not brought as soon as pos- sible after S learned of judgment, and he did not offer plausible explanation for delay. Only re- alistic explanation for delay was deliberate choice on part of S, so- phisticated litigant, who wilfully ignored judgment for over six months, and he only responded when plaintiff tried to enforce judgment. While S had arguable defence and dismissal of motion would result in prejudice to him, granting motion would have more adverse effect on overall integrity of administration of justice than denying motion. In- terests of justice favoured deny- ing motion. Redabe Holdings Inc. v. I.C.I. Construction Corp. (2017), 2017 CarswellOnt 3440, 2017 ONSC 1553, P.J. Flynn J. (Ont. S.C.J.). Criminal Law PRE-TRIAL PROCEDURE Search and seizure under proceeds of crime legislation Proceeds of unlawful activity subject to mandatory forfeiture While investigating report that R was being assaulted by former boyfriend at her home, police found suitcase on R's lawn con- taining R's new boyfriend's ID as well as clothes, video games, binoculars, balaclava, facemask, digital scale, and shoebox con- taining $29,900 in cash. Appli- cation judge found $29,900 to be proceeds of unlawful activity, found that R failed to establish that she was owner of cash or that forfeiture order was harsh or inequitable, granted A-G's application for forfeiture order under Civil Remedies Act, but refused to approve agreement parties made that $4,000 of cash be paid to R, finding amount to be arbitrary and unexplained. Application judge ordered en- tire $29,900 forfeited to Crown under Act. A-G appealed. Ap- peal dismissed. Although settle- ments of ordinary proceedings were to be encouraged, proceed- ing under Act was special statu- torily created proceeding for extraordinary remedy by which lawful owner of property could have it forfeited for redistribu- tion to others as consequence of its use in criminal activities. Once property was found to be proceeds of unlawful activ- ity under Act, forfeiture order was mandatory, subject only to finding that interests of justice required forfeiture to be refused. Possibility of apportioning of forfeited property only arose upon proof of identity of legiti- mate property owner, and ap- plication judge expressly found that he was not satisfied that R was legitimate owner of any of cash. Application judge correct- ly concluded that entire amount had to be forfeited. Court had obligation to ensure Act's re- quirements and purpose were met, as orders under Act affected not just parties to settlement but world at large. Application judge found, as fact, that monies were proceeds of unlawful activity, so forfeiture was mandatory sub- ject to two exceptions and appli- cation judge found no evidence to invoke first exception and no reason to exercise discretion to grant relief from forfeiture. Ap- plication judge's exercise of dis- cretion was reasonable and there was no basis to interfere with it. Ontario (Attorney Gen- eral) v. $29,900 in Canadian Currency (in rem) (2017), 2017 CarswellOnt 4555, 2017 ONSC 2003, Sachs J., Nordheimer J., and Gilmore J. (Ont. Div. Ct.); affirmed (2016), 2016 Carswel- lOnt 17564, 2016 ONSC 6887, M.D. Faieta J. (Ont. S.C.J.). Family Law DIVISION OF FAMILY PROPERTY Order for division of property Husband's pleadings struck out for failing to provide required disclosure Parties had two children who were both adults. Husband was navy commander in Canadian Armed Forces, and wife was registered nurse. Wife started application and husband filed answer but he failed to appear at case conference and settlement conference, and he failed to pro- vide required disclosure. Order was made striking out husband's pleadings, uncontested trial was held, and final order was issued. Husband brought motion to set aside previous court orders, including writ of seizure and sale. Motion dismissed. Court endorsements requiring disclo- sure were very clear and hus- band failed to provide requested disclosure despite having been given several opportunities to do so. Husband was ordered to pay costs on many occasions, but he had not paid any costs that had been ordered. Case was important to parties and was moderately complex, but it was made infinitely more dif- ficult and lengthy by virtue of husband's lack of disclosure and lack of attendance at conferenc- es. Husband provided no evi- dence of fraud, mistake or lack of notice with respect to any of orders made. Husband had not been dealing in good faith and had caused additional time, ef- fort and expense to be expended by wife to resolve matter. Given husband's failure to comply with court orders and his lack of disclosure, case could not be dealt with justly. Husband's conduct utilized valuable judi- cial resources to detriment of other cases. Husband had not provided plausible explanation for his default, and he had not established he had arguable case on merits. Setting orders aside would be prejudicial to wife. Arnold v. Deere (2017), 2017 CarswellOnt 4556, 2017 ONSC 1936, Stanley Kershman J. (Ont. S.C.J.).

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