STANDARD OF APPELLATE REVIEW OF ORDERS APPROVING RECEIVERS' REPORTS

Today’s careful decision in 1117387 Ontario Inc. v. National Trust Company, 2010 ONCA 340 is a good source for the current law on reviewing actions by a court appointed receiver:

[43]         The principles to be applied in reviewing a sale or proposed sale by a court-appointed receiver are set out in this Court’s decision in HSBC Bank of Canada v. Deloitte & Touche (2004), 71 O.R. (3d) 355.  A court-appointed receiver has a fiduciary duty to act honestly and fairly on behalf of all who have an interest in the debtor’s property.  The receiver, as an officer of the court, is obliged to make full and fair disclosure to the court in all of its applications:  HSBC at para. 26.  The court should rely on the receiver’s expertise in arriving at its recommendations and is entitled to assume that the receiver is acting properly unless the contrary is clearly shown.

[44]         Particularly where, as in this case, the receiver is dealing with an "unusual or difficult asset", the court will only interfere in special circumstances:  HSBC at para. 23.  While the court must carefully scrutinize the procedure the receiver followed, it must be remembered that the receiver must act “with meticulous correctness, but not to a standard of perfection”: HSBC at para. 26. 

[45]         Finally, I note that the orders appealed from are discretionary in nature. As in the case of all discretionary decisions, this court will only interfere where the judge has erred in law, seriously misapprehended the evidence, or exercised discretion based on irrelevant or erroneous considerations or failed to give any or sufficient weight to relevant considerations: HSBC at para. 22.

[46]         In Royal Bank v. Soundair Corp. (1991), 4 O.R. (3d) 1 (C.A.), at p. 6, four factors are identified as considerations for the court in considering “whether a receiver who has sold a property acted properly”.  In my view, with appropriate modifications, the same factors can be applied in considering the providence of this settlement, where the values of both a property and a claim for damages are in issue:

(a)  Whether the receiver has made a sufficient effort to get the best price and has not acted improvidently;

(b)  The interests of all parties;

(c)  The efficacy and integrity of the process by which offers are obtained; and

(d)  Whether there has been unfairness in the sale process.

[47]         Finally, at p. 7., Soundair affirmed the principle first stated in Crown Trust v. Rosenberg (1986), 60 O.R. (2d) 87 (H.C.J.), that a court “ought not sit as on appeal from the decision of the receiver, reviewing in minute detail every element of the process by which the decision is reached.”