Executive Summary: Key Legal and Evidentiary Issues

• The court found that Julie Chamagne’s motion for “emergency” relief under Civil Procedure Rule 28 did not meet the threshold of an emergency and dismissed her request for expedited intervention on behalf of Kindred Living Inc.

• Disputes among Kindred’s directors and shareholders focused on the enforceability and validity of three promissory notes in favor of Michael Iosipescu, which resulted in default judgments totaling approximately $500,000.

• The court determined that the circumstances leading to the alleged emergency were foreseeable and due in part to delay by Julie, Thomas Chamagne, and Valerie Evans, and not a sudden or urgent occurrence requiring immediate court action.

• Issues regarding the authority to act for Kindred and the division among directors and shareholders were central to the court’s analysis of both the emergency motion and the underlying corporate dispute.

• The court applied Tariff C of the Nova Scotia Civil Procedure Rules to the costs decision, finding that standard tariff costs were appropriate and rejecting requests for higher lump sum awards.

• Costs were awarded against Julie Chamagne in favor of Michael Iosipescu ($7,000) and Marc and Nick Gill ($3,000), payable forthwith and in any event of the cause.

Facts of the case

Kindred Living Inc. is a privately held corporation incorporated in approximately 2012 for the purpose of owning and operating the “Village at the Crossing” property development project in Halifax, Nova Scotia. Its shares are held equally by four individuals: Julie Chamagne (25%), Thomas Chamagne (25%), Nick Iosipescu (25%), and Marc Iosipescu (25%). Julie, Nick, and Marc are listed as directors, and the court found that Thomas was also a director at the relevant times.

In June 2022, three separate promissory notes were executed by Kindred, naming Michael Iosipescu as the promisee. These notes were signed by each of the four directors. Michael provided ongoing services to Kindred between 2012 and 2022, and the promissory notes were intended as compensation for his services. The notes contemplated repayment schedules and included provisions for full payment in the event of a sale of Kindred’s assets.

No payments were made to Michael under the promissory notes after June 27, 2022. On June 13, 2024, Michael filed three separate actions for debt, one for each promissory note. Julie was served with the claims on September 20, 2024, but no defenses were filed by Kindred. As a result, three default judgments in favor of Michael, in the amount of approximately $500,000 plus, were issued against Kindred on December 19, 2024, and registered against Kindred’s property.

The emergency motion and internal corporate conflict

There was a disagreement among the directors and shareholders regarding Kindred’s response to the default judgments and the impending expiry of the existing mortgage on July 10, 2025. Julie, supported by Thomas, sought an “emergency” motion under Civil Procedure Rule 28, requesting the court to permit her alone to act in the best interests of Kindred pursuant to section 4 of the Third Schedule of the Companies Act, RSNS 1989 c. 81. The relief sought included granting her leave to defend the three actions on behalf of Kindred, vacating the default judgments, granting permission to file a defense, and ordering the removal of the lis pendens recorded against Kindred’s property.

Julie argued that the existence of the default judgments and lis pendens would interfere with the renewal of Kindred’s mortgage, which was due to expire on July 10, 2025, and that this constituted an emergency. The court, however, found that the mortgage renewal deadline and the risk of default were foreseeable and had been known since the last renewal in June 2022. The court attributed responsibility for the delay in addressing the mortgage renewal and the litigation to Julie, Thomas, and Valerie Evans, who managed Kindred’s day-to-day affairs but was not a director, officer, or shareholder.

The court also found that Julie’s testimony was vague and guarded in important respects and that her credibility was somewhat wanting. The court noted that Julie’s position was that Michael was owed money, but the amount was disputed, and that Kindred was not denying liability, only the quantum.

Discussion of policy terms and legal standards

The court reviewed the requirements for an emergency motion under Civil Procedure Rule 28, which requires that an emergency exists of sufficient gravity to require a speedy hearing, that all parties can be in attendance, and that the gravity of the emergency outweighs any inconvenience to a party. The court found that Julie had not established these criteria and that the circumstances did not amount to an emergency as defined by the rules and relevant case law. The court also referenced the requirements for granting leave to bring a derivative action under section 4 of the Third Schedule of the Companies Act, including reasonable notice, good faith, and that the action appears to be in the company’s best interests.

Decision on costs

Following the dismissal of Julie’s emergency motion, the court addressed the issue of costs. Julie argued for the application of Tariff C, suggesting that the maximum amount of $1,000 for a one-half day hearing should be awarded to Michael Iosipescu and $1,000 to Marc and Nick Gill collectively. Michael and the Gill brothers sought higher lump sum awards reflecting their actual legal expenses, citing the complexity and preparation required. The court reviewed the relevant rules and case law, including the principle that costs should provide a substantial contribution to reasonable expenses but not a complete indemnity, and that tariffs are the norm unless special circumstances justify departure.

The court found that standard Tariff C costs were sufficient and appropriate, given that the hearing was limited to the threshold issue of emergency and did not address the merits of the underlying claims. The judge awarded $7,000 to Michael Iosipescu and $3,000 to Marc and Nick Gill, all-inclusive and payable forthwith by Julie and in any event of the cause.

Ruling and overall outcome

The court dismissed Julie Chamagne’s motion for emergency relief, finding that there was no emergency as required by Civil Procedure Rule 28. The default judgments in favor of Michael Iosipescu remain in place. Costs were awarded against Julie, ordering her to pay $7,000 to Michael and $3,000 to Marc and Nick Gill. The court’s decision was based strictly on the facts and evidence presented, and no exact amount was determined on the substantive claims in this decision, but the costs awards are specified as above.