Executive Summary: Key Legal and Evidentiary Issues

• Enforcement of loan and security agreements, including defaults and remedies under contractual and statutory provisions.

• Appointment of a receiver under the Bankruptcy and Insolvency Act and Law and Equity Act to protect the creditor’s interests.

• Determination and quantification of indebtedness owed by the borrower and guarantor.

• Priority of security interests, particularly in relation to outstanding tax debts owed to the Crown.

• Suitability of summary trial procedure for resolving complex commercial disputes.

• Assessment of entitlement to full indemnity costs based on contractual provisions.

Background and parties

Royal Bank of Canada (RBC) initiated proceedings against 1343173 B.C. Ltd. (operating as Stromsten Enterprises) and its director and guarantor, Matt Ashley Stromsten, to enforce various loan and security agreements. RBC was represented by S.A. Dubo, while the defendants were represented by S.M. Gardner. The dispute arose from a series of credit and leasing arrangements, including a credit agreement, a business Visa agreement, a general security agreement (GSA), and a master lease covering vehicles and equipment used in the defendant’s trucking business. Mr. Stromsten personally guaranteed the company’s debts up to $500,000.

Credit facilities and security arrangements

RBC extended a revolving credit line and a Visa credit card to 1343173 B.C. Ltd., with a maximum Visa limit of $100,000. The parties also entered into a master lease for trucks and trailers. The general security agreement granted RBC a security interest in all present and after-acquired personal property of the company. RBC properly registered its security interests, making it the primary secured creditor. The agreements required the borrower to pay all of RBC’s fees, costs, and expenses associated with the credit facilities and their enforcement.

Defaults and demands

The company defaulted on its obligations by failing to make payments under the credit line, Visa, and lease agreements. RBC issued demands for immediate repayment on August 29, 2024, to both the company and Mr. Stromsten, but no payments were made. RBC’s security was mainly over vehicles and equipment, and the bank expressed concern that further delay would erode its security position due to asset depreciation and accruing interest. As of February 13, 2025, the outstanding indebtedness was $2,214,710.40, with interest and costs continuing to accrue.

Receivership application and legal framework

RBC sought three orders: (1) judgment against both the company and Mr. Stromsten as guarantor, (2) appointment of Grant Thornton Limited as receiver of all company assets, and (3) an award of all fees, costs, and expenses. The court considered the statutory framework under the Bankruptcy and Insolvency Act (BIA) and the Law and Equity Act (LEA), as well as the contractual right to appoint a receiver under the GSA. The court analyzed factors such as the risk to RBC’s security, the nature and preservation of the assets, the balance of convenience, and the impact of delay.

Defendants’ position and court’s findings

The defendants argued for more time to secure alternative financing, citing ongoing efforts and a payment plan with the Canada Revenue Agency (CRA) for outstanding tax debts. However, the court found that the defendants had already been afforded significant time and that no realistic refinancing plan had materialized. The court also noted the Crown’s priority for certain tax debts, which could further jeopardize RBC’s security. The court determined that it was just and convenient to appoint a receiver to preserve and protect the assets, and that summary trial was appropriate given the urgency and lack of disputed material facts.

Judgment, costs, and outcome

The court granted all of RBC’s requested orders. Judgment was entered against 1343173 B.C. Ltd. and Matt Ashley Stromsten in the amount of $2,223,607.33, together with post-judgment interest. Grant Thornton Limited was appointed as receiver of all company assets. RBC was awarded costs on a full indemnity basis, with the exact amount to be assessed by the court.