Injunctions Primer for LITIGATORS
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Injunctions Primer FOR LITIGATORS chair Jason Squire Lerners LLP November 1, 2016 *CLE16-0110101-a-puB* DISCLAIMER: This work appears as part of The Law Society of Upper Canada’s initiatives in Continuing Professional Development (CPD). It provides information and various opinions to help legal professionals maintain and enhance their competence. It does not, however, represent or embody any official position of, or statement by, the Society, except where specifically indicated; nor does it attempt to set forth definitive practice standards or to provide legal advice. Precedents and other material contained herein should be used prudently, as nothing in the work relieves readers of their responsibility to assess the material in light of their own professional experience. No warranty is made with regards to this work. The Society can accept no responsibility for any errors or omissions, and expressly disclaims any such responsibility. © 2016 All Rights Reserved This compilation of collective works is copyrighted by The Law Society of Upper Canada. The individual documents remain the property of the original authors or their assignees. The Law Society of Upper Canada 130 Queen Street West, Toronto, ON M5H 2N6 Phone: 416-947-3315 or 1-800-668-7380 Ext. 3315 Fax: 416-947-3991 E-mail: [email protected] www.lsuc.on.ca Library and Archives Canada Cataloguing in Publication Injunctions Primer for Litigators ISBN 978-1-77094-178-6 (Hardcopy) ISBN 978-1-77094-177-9 (PDF) INJUNCTIONS PRIMER FOR LITIGATORS Chair: Jason Squire, Lerners LLP November 1, 2016 9:00 a.m. to 12:00 p.m. Total CPD Hours = 2 h 30 m Substantive + 30 m Professionalism Donald Lamont Learning Centre The Law Society of Upper Canada 130 Queen St. W. Toronto, ON SKU CLE16-01101 Agenda 9:00 a.m. – 9:20 a.m. Welcome and Opening Remarks Jason Squire, Lerners LLP 9:20 a.m. – 10:20 a.m. Injunctions in the Litigator’s Toolbox Moderator: Jason Squire, Lerners LLP Panelists: Monique Jilesen, Lenczner Slaght LLP Dom Magisano, Lerners LLP Hendrik Nieuwland, Shields O’Donnell MacKillop LLP 10:20 a.m. – 10:30 a.m. Go Ahead and Ask Us - Q & A Panel 1 10:30 a.m.-10:50 a.m. Coffee and Networking Break 10:50 a.m. – 11:50 a.m. Understanding Strategic Considerations and Legal and Ethical Obligations (30 minutes ) Moderator: Jason Squire, Lerners LLP Panelists: The Honourable Duncan Grace, Superior Court of Justice Rocco DiPucchio, Lax O’Sullivan Lisus Gottlieb LLP Kim Mullin, Weir Foulds LLP 11:50 a.m. – 12:00 p.m. Go Ahead and Ask Us – Q & A Panel 12:00 p.m. Program Ends 2 INJUNCTIONS PRIMER FOR LITIGATORS November 1, 2016 SKU CLE16-01101 Table of Contents TAB 1 Receiverships – Not Just a Tool for the Banks…………………..1 – 1 to 1 – 13 Domenico Magisano, Lerners LLP Christopher Shorey, Lerners LLP TAB 2 Injunctions and Norwich Orders in the Employment Context……………………………………………………………………………...2 – 1 to 2 – 8 Hendrik Nieuwland, Shields O’Donnell MacKillop LLP TAB 3 Strategic and Ethical Considerations in Seeking Injunction Relief……………………………………………….……………..3 – 1 to 3 – 15 Rocco DiPucchio, Lax O’Sullivan Lisus Gottlieb LLP Ryann Atkins, Lax O’Sullivan Lisus Gottlieb LLP TAB 4 Injunctions: Understanding Legal and Ethical Obligations……………………………………………………………………..4 – 1 to 4 – 10 Kim Mullin, WeirFoulds LLP Lia Boritz, WeirFoulds LLP TAB 5 Relevant Resources……………………………………..…………………….5 – 1 to 5 – 1 TAB 1 Injunctions Primer for Litigators Receiverships – Not Just a Tool for the Banks Domenico Magisano, Lerners LLP Christopher Shorey, Lerners LLP November 1, 2016 Receiverships – Not Just a Tool for the Banks Domenico Magisano and Christopher Shorey, Lerners LLP In our current legal environment when a receivership is mentioned the most common visual is that of an enforcement step taken by a secured creditor after its debtor defaults on its loan. While a receivership is still a form of injunctive relief, it has become such a common proceeding in insolvency circles that our commercial courts and insolvency practitioners have created a set of standard form Orders1 to ensure consistency in the relief provided by the court. While receiverships are still quite prevalent in insolvency circles, in recent years the use of receiverships has been expanded both in terms of use and the flexibility of powers provided by the court. In short, receiverships are not merely liquidation tools used by secured lenders; receiverships are increasingly being used as investigative tools, business management tools, and yes, judgment enforcement tools. With this added scope have come added legal and practical concerns together with added questions about the scope of a Receiver’s appointment: Receivers are under continual scrutiny by both the court and other stakeholders both in terms of their actions and their costs, all while being asked to manage what are often difficult personal and business dynamics. The recent Court of Appeal decision in Akagi v. Synergy Group (2000) Inc.2 (which will be discussed in detail later in this paper) should serve as a cautionary tale to receivers (and the lawyers who represent them) about the ramifications of a receiver straying beyond its mandate. This paper will introduce the reader to receivership proceedings other than those commenced under the Bankruptcy and Insolvency Act3, the differences in the test for the appointment of a receiver under the BIA and other legislation, the ways that a receivership can assist the litigation process and the ramifications when a receiver wanders too far from its original mandate. 1http://www.ontariocourts.ca/scj/practice/practice- directions/toronto/#Commercial_List_Forms_including_Model_Orders 2 2015 ONCA 368 (hereinafter “Synergy Group”) 3 RSC 1985 c. B-2 (the “BIA”) 1 - 1 BIA Receiverships and Other Receiverships Any analysis of receiverships must start from the baseline that it is just another form of injunctive relief. As such the test for appointment of a receiver is the same as the test for obtaining a Mareva injunction or an Anton Piller order. Accordingly the tri-part test as set out in RJR-MacDonald4 remains applicable. That test requires: (i) a preliminary assessment of the merits of the case to ensure that there is a serious issue to be tried; (ii) a determination that the moving party would suffer "irreparable harm" if the motion is refused, and "irreparable" refers to the nature of the harm suffered rather than its magnitude; and (iii) an assessment determining which of the parties would suffer greater harm from the granting or refusal of the remedy pending a decision on the merits - that is, the "balance of convenience". However, the courts have also recognized a variety of factors unique to receiverships that should be considered when determining whether it is ‘just and convenient’ to grant a receiver: (a) the appointment of a receiver to preserve assets for the purposes of execution is extraordinary relief, which prejudges the conduct of a litigant, and should be granted sparingly; (b) the appointment of a receiver for this purpose is effectively execution before judgment and to justify the appointment there must be strong evidence that the plaintiff's right to recovery is in serious jeopardy; (c) the appointment of a receiver is very intrusive and should only be used sparingly, with due consideration for the effect on the parties as well as consideration of the conduct of the parties; (d) in deciding whether to appoint a receiver, the court must have regard to all the circumstances, but in particular the nature of the property and the rights and interests of all parties in relation thereto; and (e) where the plaintiff's claim is based in fraud, a strong case of fraud, coupled with evidence that the plaintiff's right of recovery is in serious jeopardy, will support the appointment of a receiver of the defendants' assets.5 4 RJR — MacDonald Inc. v Canada (Attorney General), 1994 CarswellQue 120 (SCC), at para 48; Anderson v Hunking, 2010 ONSC 4008, at para 15(e) 5 Anderson v Hunking, 2010 ONSC 4008, at para 15; GE Real Estate v Liberty Assisted Living, 2011 ONSC 4136, at para 88 1 - 2 While the above test is generally applicable the courts have generally held that when a secured creditor is seeking to appoint a receiver over its debtor and its security documentation provides for the appointment of a receiver on default, the applicant need not demonstrate irreparable harm6. The nature of the receivership order becomes less extraordinary and less grounded in equity when the parties have contracted for a receiver as a term of their agreement.7 As a result, receiverships in the realm of secured transactions and the BIA have become (perhaps justifiably so) much more commonplace. Notwithstanding, there are other statutes and other instances where a receivership can be appropriate, even helpful, in resolving disputes. 1. Receiverships pursuant to the Courts of Justice Act8 Section 101 of the CJA states: In the Superior Court of Justice, an interlocutory injunction or mandatory order may be granted or a receiver or receiver and manager may be appointed by an interlocutory order, where it appears to a judge of the court to be just and convenient to do so. Section 101 is quite broad and has been used to appoint receivers in aid of execution on a judgment9 and in instances where an appointing party isn’t seeking possession of the respondent’s assets, but wishes a receiver to have investigative powers over the respondent’s 6 Bank of Nova Scotia v Freure Village on Clair Creek, 1996 CarswellOnt 2328, at para 11 7 Bank of Montreal v Sherco Properties, 2013 ONSC 7023, at para 42; Bank of Montreal v Carnival National Leasing Ltd., 2011 ONSC 1007, at paras 25 & 27 8 R.S.O 1990 c.