“Investigative” or “Investigatory” Receiverships

Akagi v. Synergy Group (2000) Inc., 2015 ONCA 368

[65]   The idea of appointing a receiver or monitor with investigative powers – and sometimes, with only those powers – has emerged in recent years.  This Court has not previously been asked to consider whether, or in what circumstances, a s. 101 receiver may be empowered in this fashion. For the purposes of this appeal, it is not necessary that the contours of such an appointment be traced in a detailed manner.  Suffice it to say that the idea of appointing a receiver to investigate into the affairs of a debtor is not itself unsound.  Rather, it is the runaway nature of the use to which the concept has been put in this case that gives rise to the problem.

[66]   Indeed, whether it is labelled an "investigative" receivership or not, there is much to be said in favour of such a tool, in my view – when it is utilized in appropriate circumstances and with appropriate restraints.  Clearly, there are situations where the appointment of a receiver to investigate the affairs of a debtor or to review certain transactions – including even, in proper circumstances, the affairs of and transactions concerning related non-parties – will be a proper exercise of the court's "just and convenient" authority under s. 101 of the Courts of Justice Act.  See, for example, Stroh v. Millers Cove Resources Inc., [1995] O.J. No. 1376 (Gen. Div.), aff'd [1995] O.J. No. 1949 (Div.Ct.); Udayan Pandya v. Courtney Wallis Simpson (17 November 2005), Toronto, 05-CL-6159 (S.C.); Century Services Inc. v. New World Engineering Corp. (28 July 2006), Toronto, 06-CL-6558 (S.C.); Loblaw Brands Ltd. v. Thornton, [2009] O.J. No. 1228 (S.C.); General Electric Canada Real Estate Financing Holding Co. v. Liberty Assisted Living, 2011 ONSC 4136 (S.C.), aff'd 2011 ONSC 4704 (Div. Ct.); DeGroote v. DC Entertainment Corp., 2013 ONSC 7101; East Guardian SPC v. Mazur, 2014 ONSC 6403; 236523 Ontario Inc. v. Nowack, 2013 ONSC 7479 (relief denied); Romspen Investment Corp. Hargate Properties Inc., 2011 ABQB 759.

[67]   It goes without saying that the root principles governing the appointment of any receiver remain in play in this context, however, and in this respect, two "bookend" considerations, are particularly germane. On the one hand, the authority of the court to appoint a receiver under s. 101 of the Courts of Justice Act "where it appears…just or convenient to do so" is undoubtedly broad and must be shaped by the circumstances of individual cases.  At the same time, however, the appointment of a receiver is an extraordinary and intrusive remedy and one that should be granted only after a careful balancing of the effect of such an order on all of the parties and others who may be affected by the order.  In the case of a receivership in aid of execution, at least, the appointment requires evidence that the creditor's right to recovery is in serious jeopardy.  It is the tension between these two considerations that defines the parameters of receivership orders in aid of execution.