Application judge not obliged to limit receiver’s liability to gross negligence or wilful misconduct

Bankruptcy and Insolvency - Practice and procedure in courts - Appeals

Applicant power producer entered into agreement with respondent company for energy project to take place in Barbados. Relationship between parties deteriorated. Company alleged producer had repudiated letter of intent regarding project. Producer disputed that breach had taken place, but accepted that contract was at end. Producer claimed amount of $2 million US due and payable from company. Producer sought declaratory relief as to amount owed and sought appointment of receiver of property and assets for company. Company was ordered to repay producer amount in Canadian currency sufficient to purchase $2 million US and application judge appointed interim receiver (KSV) over company’s assets and undertakings for 30 days to determine if “a sensible plan of repayment” could be made, failing which, producer would be entitled to have KSV appointed as receiver of all company’s property. Company did not repay amounts ordered and KSV became receiver to ensure payment was made. Company appealed. Appeal dismissed. Appeal turned on application judge’s interpretation of documents exchanged between parties and procedural underpinnings of proceedings initiated. Application was properly brought under R. 14 of Rules of Civil Procedure (Rules). While, in accordance with R. 14.06(3) of Rules, producer should have stated rule or statute under which application was brought, which was procedural, not substantive, requirement. Its omission did not invalidate application that otherwise complied in substance with R. 14.02 of Rules. It was open to application judge to conclude that documents proffered by company, including proposed fresh evidence, fell short of demonstrating that final approval had been granted. Application judge’s interpretation was reasonable and was owed deference on appeal. Moreover, application judge was not obliged to accept fresh affidavits or re-open application. Application judge correctly observed, prior to its request to re-open application, that company had never advanced position that it was not a party letter of intent. Decisions for repayment and appointment of receiver if failure to pay were decisions that represented reasonable exercise of application judge’s discretion as case management judge of Commercial List of Ontario Superior Court of Justice. There was no dispute that KSV qualified as receiver. Further, application judge understood that he was not obliged to limit receiver’s liability to gross negligence or wilful misconduct. KSV’s limited liability permitted orderly execution of its duties without concern that it would be subject to needless litigation.

Potentia Renewables Inc. v. Deltro Electric Ltd. (2019), 2019 CarswellOnt 15397, 2019 ONCA 779, M. Tulloch J.A., L.B. Roberts J.A., and B.W. Miller J.A. (Ont. C.A.); affirmed (2018), 2018 CarswellOnt 12310, 2018 ONSC 3437, T. McEwen J. (Ont. S.C.J.).

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