Executive Summary: Key Legal and Evidentiary Issues

• Standing was recognized for guarantor and director Robert Cramers to personally apply to vary the receivership order as an “interested party” under paragraph 35 of the order.

• The Court interpreted the Forbearance Agreement as giving Servus (and AFMC as assignee) contractual discretion to insert Elite and/or the corporate guarantors, including BCCQ, as “Debtor(s)” in the Consent Receivership Order, subject to good-faith limits.

• AFMC breached the Forbearance Agreement by enforcing its Security through the consent receivership application without first providing a written notice of default, in the absence of any evidence that notice would have materially and adversely prejudiced its legal or security position.

• The application for the Consent Receivership Order on July 31, 2025 was ex parte, which triggered a duty of full, frank and candid disclosure that AFMC did not fully meet because it did not disclose the lack of default notice or explain why only Elite LP, Elite GP and BCCQ were inserted as “Debtors.”

• On a de novo review, the Court found no persuasive evidence that including BCCQ in the receivership was necessary to recover the indebtedness, given the Elite Property’s $9,500,000 listing and the evidence of AFMC’s secured position relative to the indebtedness.

• The Court varied the order by removing BCCQ from the definition of “Debtor,” confirmed the order in all other respects, and expressly left open the possibility of separate proceedings to enforce other security against BCCQ or to seek a new receivership over BCCQ.

Factual background and parties’ relationships
The proceedings arise out of a consent receivership order granted on July 31, 2025, appointing a receiver over the assets of a defined “Debtor,” which included Elite Storage North Edmonton LP (Elite LP), Elite Storage North Edmonton GP Ltd (Elite GP), and BCCQ Global Holdings Ltd (BCCQ). The order was granted at the request of Alberta Finance & Mortgage Corporation (AFMC), without specific notice to Elite or BCCQ. Elite LP and Elite GP are collectively referred to as “Elite” in the decision. BCCQ is owned by two 50% voting shareholders: Winsong Holdings Ltd (Winsong), whose 100% voting shareholder is Robert Cramers, and Grandin Investment Corporation (Grandin), whose 100% voting shareholder is Cameron Colby Quilliam. Quilliam is a director of AFMC and his corporation Grandin holds a 25% shareholding in AFMC. Both Cramers and Quilliam are also directors of Elite GP. The Receiver reported that the nature and handling of BCCQ, Elite LP and Elite GP is “intertwined.”

Loan agreements, guarantees and commencement of the action
In 2022 and 2023, Elite LP, by its general partner Elite GP, entered into credit facilities and loan agreements with Connect First and Servus Credit Union Ltd. To secure the indebtedness under these loan agreements, Elite LP granted Security to Servus, including a general security agreement over all of Elite LP’s present and after-acquired personal property. In addition, several guarantees were executed: Elite GP gave an unlimited guarantee and postponement effective January 5, 2023 (the Elite GP Guarantee); BCCQ and Bodnar Capital Corp. executed a joint and several corporate guarantee and postponement for $1,875,000 (the Joint Corporate Guarantee); and Cramers, Quilliam and Conrad Bodnar executed a joint and several personal guarantee and postponement for $1,875,000 (the Joint Personal Guarantee). Elite GP, BCCQ, Bodnar Capital, Cramers, Quilliam and Bodnar are collectively referred to as the “Guarantors,” and these instruments are collectively the “Guarantees.” On March 26, 2025, Servus commenced the Action against Elite and the Guarantors. In the statement of claim, Servus claimed judgment against Elite LP (the Borrower) and Elite GP for $5,613,712, and against BCCQ, Bodnar Capital, and the individual guarantors for $1,875,000 under the respective guarantees. Servus also sought the appointment of a receiver and manager over the assets of Elite LP. The statement of claim did not allege that Servus held any Security over the assets of the Guarantors.

The forbearance agreement and consent receivership framework
On April 22, 2025, Servus, Elite and the Guarantors entered into a Forbearance and Preservation of Rights Agreement. In that agreement, the parties (among other things) acknowledged the Indebtedness and default under the Security, waived further notice for enforcement of the Security and further demands (subject to the agreement’s terms), agreed to pay a $10,000 forbearance fee, to make all scheduled payments, and to pay the Indebtedness by July 15, 2025. Elite LP and the Guarantors agreed to file a demand for notice in the Action and to execute “Consent Documents,” including a form of consent judgment, a form of consent receivership order (the Consent Receivership Order), and a form of consent redemption order. Servus and/or its legal counsel were irrevocably authorized to complete any incomplete portions of the Consent Documents, without notice to Elite LP or the Guarantors, and to apply for, enter and file the Consent Documents if the Indebtedness was not paid by July 15, 2025, subject to the specific terms of the Forbearance Agreement. The Forbearance Agreement defined “Security” as all security granted or to be granted by the Borrower and the Guarantors to Servus to secure the Indebtedness, “including without limitation” documents listed in Schedule A, and contemplated that the Guarantors, including BCCQ, had granted or might grant security in the future. The Consent Receivership Order appended to the Forbearance Agreement was left intentionally incomplete: the space for the defined “Debtor” was blank, and the text contemplated the appointment of a Receiver over the Debtor’s assets under section 243(1) of the Bankruptcy and Insolvency Act, section 13(2) of the Judicature Act, and section 49 of the Law of Property Act. The Forbearance Agreement was signed by Cramers on behalf of Elite and BCCQ, and by Cramers and Quilliam personally.

Assignment to AFMC and the July 31, 2025 consent receivership order
On July 8, 2025, Servus and AFMC entered into an Assignment of Debt and Security Agreement under which, in exchange for payment of the amount of the debt owing under the loan agreements, Servus assigned to AFMC its rights under the Action, the Loan Agreements, the Forbearance Agreement and the Security. All parties agreed that there was no security against any assets of BCCQ assigned under this agreement. The Indebtedness was not paid by July 15, 2025, and Elite LP and the Guarantors did not file a demand for notice in the Action as the Forbearance Agreement required. On July 31, 2025, AFMC applied to have the Consent Receivership Order granted and entered. Before presenting it to the Court, AFMC had filled in the blank in the Consent Receivership Order so that “Debtor” included Elite LP, Elite GP and BCCQ, and did not include any other Guarantors. The Court granted the order, and the Receiver was appointed as receiver and manager over the assets of Elite and BCCQ. The filed order was provided to Cramers’ then-counsel on August 1, 2025. In the months that followed, Cramers’ counsel contacted the Court to obtain dates and filed the present Application on November 17, 2025; the Application was heard on November 25, 2025.

The application, issues and parties’ positions
Cramers’ Application sought to amend the receivership order to remove BCCQ from the definition of “Debtor.” He advanced several grounds, including that BCCQ was never intended to be a Debtor under the Consent Receivership Order; that the statement of claim did not plead a security interest in BCCQ’s assets or seek receivership relief against them; that the Forbearance Agreement and the Assignment Agreement did not grant or assign any Security over BCCQ’s assets; that AFMC failed to provide a contractual notice of default; that AFMC proceeded ex parte without justification and in breach of the Forbearance Agreement; that AFMC did not make full, frank and candid disclosure; and that BCCQ was not insolvent and Security over Elite’s assets was sufficient to cover the indebtedness. AFMC opposed the Application, arguing that Cramers lacked authority to bring it because of a deadlock between Winsong and Grandin and the parties’ Arbitration Agreement relating to disputes over BCCQ; and that, in any event, BCCQ should remain a Debtor in the receivership because of alleged delay by Cramers, costs already incurred by the Receiver in relation to BCCQ, the likelihood that not all parties would be paid from realization on Elite’s assets, AFMC’s funding of the receivership, and its position that BCCQ was insolvent. The Receiver, Bodnar Capital and Bodnar took no position.

Standing and interpretation of the Forbearance Agreement
Paragraph 35 of the receivership order permitted “any interested party” to apply to vary or amend the order on notice. AFMC conceded that “interested party” had a wide scope. The Court held that Cramers filed the Application on his own behalf, not on BCCQ’s behalf, and that he was a Guarantor, a party to the Forbearance Agreement, a signatory to the Consent Receivership Order, a director and indirect owner of a 50% shareholder of BCCQ, and a party to the Arbitration Agreement. In those circumstances, the Court found that he was an “interested party” and had standing in his personal capacity to seek variation of the order. Turning to contractual interpretation, the Court analyzed the Forbearance Agreement and the Consent Receivership Order using established principles of contractual interpretation, including reading the terms in light of the agreement as a whole and the surrounding circumstances. The judge rejected Cramers’ argument that only Elite LP or Elite GP could be inserted as the Debtor because they alone had granted Security and were named for receivership relief in the Action. Instead, the Court found that the parties objectively intended to leave the Debtor blank in the Consent Receivership Order and to give Servus (and AFMC as assignee) the discretion to insert the name or names of the Debtor, as part of the consideration for Servus’ forbearance from enforcing the Security and pursuing the Indebtedness.

Contractual discretion and good faith; notice of default
The Court concluded that Servus and AFMC’s discretion was not unlimited. First, only Elite and the Guarantors—i.e., parties to the Forbearance Agreement—could be inserted as Debtors, and no one suggested otherwise. Second, the Court held that Servus and AFMC owed a duty to exercise their contractual discretion in good faith, consistent with the purposes for which it was granted, in line with the Supreme Court’s decision in Wastech Services Ltd v Greater Vancouver Sewerage and Drainage District. The judge found that the purpose of the discretion was to allow Servus and AFMC to choose which of Elite and/or the Guarantors to put into receivership for the purpose of recovering the Indebtedness under the loan agreements and guarantees. However, the record contained very little evidence about why AFMC specifically chose to include BCCQ (and not other Guarantors), and the Court held that it could not determine on the evidence whether AFMC had or had not breached its duty of good-faith exercise of that discretion; it found that it ultimately did not need to resolve that issue to decide the Application. On notice, the Court analyzed clause 8 of the Forbearance Agreement, which required Servus, prior to enforcing the Security, to give written notice specifying the event of default it intended to rely on, unless in Servus’ reasonable opinion such notice would materially and adversely prejudice its legal or security position. The Court found that AFMC’s application to obtain the Consent Receivership Order against Elite de facto constituted, at least in part, enforcement of its Security, triggering the notice requirement. AFMC led no evidence that it held the necessary opinion that giving notice would cause material adverse prejudice, and instead appeared to have proceeded on the assumption that no notice was required. The Court rejected AFMC’s argument that awareness of the repayment deadline amounted to effective notice and held that no written notice, as required by the Forbearance Agreement, had been given. The Court therefore found that AFMC breached the Forbearance Agreement by failing to provide a notice of default before applying for the Consent Receivership Order against Elite.

Ex parte nature of the receivership application and duty of disclosure
The Court rejected AFMC’s submission that its application for the Consent Receivership Order was not ex parte. It held that, even without a formal filed application, AFMC’s appearance on July 31, 2025 was an application to the Court, that only AFMC was present and heard, and that neither Cramers nor at least some of the other Guarantors had actual notice of the application. That made it an ex parte application. As a result, AFMC owed a duty of full, frank and candid disclosure, including disclosing facts that might militate against the granting of the order. The Court accepted that AFMC did not have to highlight the absence of BCCQ-specific Security or receivership relief in the statement of claim, because BCCQ had consented to a blank Consent Receivership Order and the Forbearance Agreement contemplated Servus’ discretion to insert Debtors. However, the Court found that AFMC failed to properly advise the Court that no contractual notice of default had been provided prior to seeking the appointment of the Receiver over Elite’s assets, and that it failed to advise whether it held the opinion that giving notice would materially and adversely prejudice its legal or security position. AFMC also did not explain or provide evidence that it had exercised its discretion to insert only Elite LP, Elite GP and BCCQ as Debtors, and not the other Guarantors, or explain why it had done so. In this context, the Court concluded that counsel’s assurance on July 31, 2025—that the order would not be a surprise to anyone, and that “the defendants all signed off on it”—was incomplete and misleading, because the parties had only agreed to a blank form of order with Servus’ discretion to fill in the Debtors and timing later. The Court found that, had these matters been fully explained, they would likely have materially affected the decision on July 31, 2025, potentially leading the Court to direct that notice of the application be given to all parties to the Forbearance Agreement. The remedy for a failure of full disclosure is discretionary and can include varying or setting aside the order. In this case, Cramers sought variation rather than setting aside, so the Court proceeded on that basis.

Whether BCCQ should remain a “Debtor” and evaluation of the evidence
The Court approached the Application as a de novo hearing on whether receivership over BCCQ was just and convenient, applying the familiar Bennett factors and the case law on consent receiverships. It gave “significant weight” to the parties’ commercial bargain—namely, that Servus and AFMC had the discretion to include BCCQ or other Guarantors as Debtors—but emphasized that inclusion of any particular Debtor still had to be appropriate and reasonable. The Court found there was no evidence of irreparable harm to AFMC or material adverse prejudice to its legal or security position if BCCQ’s assets were excluded from the receivership. It accepted evidence that a “significant Elite asset,” a commercial self-storage building in Edmonton (the Elite Property), had been listed by the Receiver for $9,500,000, and that, based on the record, AFMC held the only registration against this property. The Forbearance Agreement recorded that the Indebtedness under the loan agreements was $5,640,675.71 as of April 14, 2025, and appeared to be $5,741,209.06 as of July 8, 2025, with interest and other charges continuing to accrue. The Court noted that the listing price was not necessarily market value and that there was no appraisal, but that the listing included income and expense data supporting the proposed sale price, and that the Receiver, as an officer of the Court, was obliged to pursue recovery in good faith and in a commercially reasonable manner. On that evidence, the Court found that it appeared likely that a sale of the Elite Property would discharge the Indebtedness under the loan agreements. The Court found that AFMC had not provided sufficient evidence to show that including BCCQ as a Debtor was necessary to recover the Indebtedness. The Court characterized BCCQ’s inclusion as unnecessary and unreasonable in light of this record and described it as an “unnecessary, superfluous and unreasonable overreach” in the context of the broader dispute between Quilliam and Cramers over the management and future of BCCQ. It also rejected AFMC’s argument that the Court should leave BCCQ in the receivership because AFMC could obtain a receivership even without the consent order, noting that BCCQ’s alleged insolvency was disputed and that the materials before the Court, including outdated 2024 financial statements and conclusory statements, were insufficient to decide insolvency. The fact that BCCQ’s own commercial property was subject to a separate AFMC mortgage did not assist AFMC on this application, because AFMC was relying on the Forbearance Agreement and the Consent Receivership Order, not on enforcement of that mortgage.

Delay, costs and the ultimate orders
The Court considered AFMC’s argument that Cramers’ delay in bringing the Application should weigh against varying the order. It found that some, but not all, of the delay was explained by the need to retain new counsel and by the Court’s commercial list schedule. Although some delay was unexplained and of concern, on balance the Court held that it was not sufficient to justify maintaining BCCQ as a Debtor in the order. In the result, the Court granted the Application and ordered that BCCQ be removed from the definition of “Debtor” in the receivership order, confirming the order in all other respects. The Court directed that its order specify it was without prejudice to any future, separate action to enforce any other security against BCCQ or to seek the appointment of a receiver or receiver-manager over BCCQ’s assets or undertakings. AFMC submitted that Cramers should be responsible for the Receiver’s costs to date for work relating to BCCQ’s assets, given his delay. The Court declined to make such an order, noting its findings in the decision and the evidence that the Receiver had spent only seven hours on BCCQ matters since July 31, 2025. With respect to costs of the Application, the Court directed that, if the parties could not agree within 30 days, they could write to the judge, who would set a process for determining costs.