Executive Summary: Key Legal and Evidentiary Issues

• Lawfulness of Casera’s enforcement of its security through receivables letters to SM Companies’ customers under the General Security Agreements and the Personal Property Security Act

• Whether Casera’s exercise of contractual discretion in calling the Demand Facilities and enforcing security breached the organizing principle of good faith or was capricious, arbitrary, or disproportionate

• Significance of the SM Companies’ admitted defaults, including failure to retire the $500,000 Bulge, regular overdrafts, NSF payments, and cash flow issues as grounds for demand and de-marketing

• Reliability and sufficiency of the individual plaintiffs’ allegations of “embezzlement” accusations, high-handed conduct, freezing of personal accounts, and interference with efforts to obtain alternative financing

• Viability of the plaintiffs’ contractual and tort claims, including alleged unlawful interference with economic relations, in light of the undisputed security terms and statutory rights to collect receivables

• Availability of summary judgment under Manitoba Rule 20, including whether the plaintiffs met their evidentiary burden to show any genuine issue requiring a trial after the defendant met its evidentiary burden

Background and parties

SM Industries Ltd. and S M Ventures Inc. are Manitoba corporations, each having Paul Minsky as their sole director and officer. Ms. Hirsch, his daughter, has an active role in the bookkeeping and financial management of the corporate plaintiffs. The individual plaintiffs are Ms. Hirsch and her husband, Mr. Hirsch. The defendant, Casera Credit Union Limited, is a credit union carrying on business in Winnipeg, Manitoba, and now carries on business as Access Credit Union, although it is referred to as Casera in the reasons. Casera brought a motion for summary judgment against all four plaintiffs. At the hearing on December 2, 2025, the court granted the motion against the individual plaintiffs and later, on December 4, 2025, advised the parties that the motion was also granted against the corporate plaintiffs, resulting in dismissal of the action in its entirety.

Financing facilities and security agreements

Industries had been a customer of Casera since approximately 2009. From that time it had a demand line of credit operating facility from Casera with a limit of $150,000.00 (the Operating Facility) and a demand line of credit payroll facility with a limit of $100,000.00 (the Payroll Facility). These are referred to as the Demand Facilities. On or around December 18, 2009, Industries provided Casera with general security over all its present and after-acquired property as security for its present and future obligations (the Industries Security Agreement). In or around January 18, 2019, Casera accepted a temporary increase in the Operating Facility (the Bulge) to an authorized limit of $500,000.00, reducing back to $150,000.00 no later than April 30, 2019. As a condition of the Bulge, Ventures, a related company utilized as part of Industries’ business, provided an unlimited guarantee of Industries’ obligations to Casera, supported by a general security agreement over all of Ventures’ present and after-acquired personal property (the Ventures Security Agreement). The two are collectively referred to as the Security Agreements. Under the General Security Agreements, each SM Company explicitly agreed that Casera could “collect, realize, sell or otherwise deal with the receivables” in such manner, on such terms and at such times, whether before or after default, as it deemed advisable and without notice to the debtor.

Use and failure to retire the Bulge

The purpose of the Bulge was to finance Industries’ operations over the winter while it carried out snow plowing work, much of which was generally paid in full later in the spring. Casera increased the credit limit of the Operating Facility to $500,000.00 in accordance with the agreement. Industries did not reduce the balance below $150,000.00 by April 30, 2019 as required. Instead, on April 30, 2019, Ms. Hirsch emailed Casera’s account manager, Mr. Klassen, advising that the Bulge would not be reduced as required and requesting until October 31, 2019 to retire it, or alternatively an additional $200,000.00 loan. She also advised that Mr. Minsky had financed $500,000.00 worth of repairs to Industries’ equipment, funded by the Operating Line, despite both her and Mr. Minsky knowing this was an inappropriate use of the Operating Line. Mr. Klassen agreed to extend the date for repayment of the Bulge to May 31, 2019 to allow for receipt and review of financial statements, at which point the request would be considered.

De-marketing decision and demand for repayment

After receiving financial statements, Mr. Klassen met with Mr. Minsky and Ms. Hirsch on June 20, 2019 and informed them that Casera had decided not to continue its relationship with the SM Companies and that the Facilities would need to be paid out in full by October 31, 2019. This was confirmed in a letter dated June 28, 2019 (the Demarket Letter). The Demarket Letter set out concerns and grounds for Casera’s decision, including default in paying down the Bulge, regular overdrafts, NSF payments, and cash flow issues. The plaintiffs did not dispute that overdrafts and NSF payments occurred, and Ms. Hirsch confirmed that this was a regular occurrence and that Casera would routinely refuse to allow overdrafts and object to them. During the months leading up to October 31, 2019, Casera continued to allow Industries to utilize the Demand Facilities. In late October 2019, Ms. Hirsch advised that Industries was applying for a loan to retire the indebtedness to Casera. In light of this representation and anticipated payout, Casera did not take steps upon the expiry of the October 31, 2019 demand deadline.

Tax arrears, requirements to pay, and partial payment

The anticipated financing fell through in January 2020. Casera understood that the SM Companies were still working toward a payout and anticipating receivables and took no steps to enforce its security at that time. In or around January 2020, Ms. Hirsch and Mr. Hirsch made a $95,000.00 loan to Industries. Ms. Hirsch said they obtained Casera’s agreement that they could pay themselves back in priority to Casera’s security; Casera disputed this. There was no dispute that the plaintiffs did not disclose at the time that they were facing a potential claim from Revenue Canada for tax arrears of various types. On or about February 25, 2020, Casera received requirements to pay from Revenue Canada totaling $104,647.45 for Industries’ obligations, requiring Casera to pay to Revenue Canada any amounts it would otherwise release to Industries. At that time, the amount owing to Casera from Industries totaled $419,876.53. On or about February 27, 2020, upon receipt of a large receivable, payment was made by Industries reducing the Demand Facilities, but Industries remained indebted to Casera in excess of $90,000.00. Ms. Hirsch later advised that another receivable anticipated in March 2020 was likely sufficient to pay out the Demand Facilities, but no such payment was made.

Demands, notices to enforce security, and proposed payment plan

On or about March 20, 2020, approximately nine months after the Demarket Letter, Casera, through counsel, made a demand on Industries and Ventures and delivered Notices of Intention to Enforce Security. At that time, the SM Companies had legal counsel. On March 27, 2020, Industries’ counsel wrote to Casera’s counsel proposing a payment plan of $5,000.00 a month commencing May 1, 2020, which would have extended repayment of the approximately $90,000.00 owing. Casera’s counsel replied on March 31, 2020, confirming Casera’s continued commitment to ending its relationship with the SM Companies, noting that promised payouts had not occurred, rejecting the proposed plan, and advising that Casera would proceed with its remedies.

Discovery of new accounts and the $95,000 payment to Ms. Hirsch

On or around April 1, 2020, Casera became aware that Industries and/or Ventures had opened accounts with Sunova Credit Union. Casera also became aware that a $95,000.00 cheque had been issued from Industries’ payroll account to Ms. Hirsch and deposited on or around January 14, 2020 into a Casera account jointly held by Mr. and Ms. Hirsch. Casera’s counsel notified Sunova Credit Union of Casera’s security interest in the receivables of Industries and Ventures and demanded that Ms. Hirsch return the $95,000.00 for application to Industries’ indebtedness to Casera. No further steps were taken at that time with respect to the payment to Ms. Hirsch. Casera stated that it continued to try to work with the SM Companies but maintained that they refused to provide requested financial disclosure and refused to commit to their proposed payment plan unless Casera discharged its security over certain collateral. The plaintiffs denied that they refused to provide financial disclosure.

Receivables letters and closure of accounts

With no resolution reached and the SM Companies still indebted under the Demand Facilities and Ventures’ guarantee, Casera took steps to enforce its security. In or about May 2020, Casera’s solicitor sent letters to a number of known customers of the SM Companies directing that any receivables payable to the SM Companies be paid directly to Casera (the Receivables Letters). During the period the Receivables Letters were in effect, Ms. Hirsch sought financing from Casera to pay out the balance of the Demand Facilities but did not proceed because she was not prepared to provide security against her home. In or around September 2020, payments were received in accordance with the Receivables Letters. Letters revoking the directions were then sent to the customers, terminating the demand. A small excess of funds was delivered to counsel for the SM Companies and the accounts were closed.

Allegations by the plaintiffs regarding high-handed conduct

The individual plaintiffs alleged that Casera’s conduct, particularly in sending the Receivables Letters and freezing their personal bank accounts, was high-handed and that resulting damages were reasonably foreseeable. The court found that the plaintiffs’ brief did not accurately reflect the evidence in some respects. The brief stated that Casera sent a letter alleging that the individual plaintiffs had embezzled $95,000.00 from SM. The affidavit of Ms. Hirsch, which was cited for that assertion, in fact described a March 31, 2020 letter from Casera’s counsel alleging that the $95,000.00 payment had been made “out of the course of business” and demanding repayment, and referred to the letter as the “March 31st letter.” The March 31 letter stated that the payment was made out of the ordinary course of business and contrary to the trust provisions of the security, but did not refer to “embezzlement.” During submissions, plaintiffs’ counsel conceded that the money was “misallocated” but not “misappropriated.” The court concluded that there was nothing untoward in the letter given the plaintiffs’ concession that the money was not properly allocated. Further allegations that a representative of Casera made oral accusations of embezzlement at the credit union were first raised in Ms. Hirsch’s affidavit about five years after the time of the alleged statements. These accusations were not pleaded. The pleadings referred instead to the brief freezing of the individual plaintiffs’ bank accounts (perhaps one day, either February 26 or February 27, 2020) and the Receivables Letters as evidence of high-handed actions. The court found the oral accusation allegations unreliable.

Summary judgment framework

The parties agreed that Manitoba Court of King’s Bench Rule 20 governed summary judgment. Rule 20.02 provides that a responding party may not rest on the mere allegations or denials in its pleadings but must set out specific facts showing a genuine issue requiring a trial. Rule 20.03(1) requires a judge to grant summary judgment if satisfied there is no genuine issue requiring a trial with respect to a claim or defence. Rule 20.03(2) provides that in making this determination, the judge may weigh the evidence, evaluate credibility, and draw reasonable inferences unless it is in the interests of justice for those powers to be exercised only at trial. Both sides relied on Dakota Ojibway Child and Family Services et al v. MBH, 2019 MBCA 91, and the Supreme Court of Canada’s decision in Hryniak, regarding the test for summary judgment. The court reproduced the Manitoba Court of Appeal’s formulation in Dakota, including that the moving party must first satisfy the motion judge that there can be a fair and just determination on the merits and that there is no genuine issue requiring a trial, and that if those requirements are met, the responding party must establish that the record, facts, or law preclude a fair disposition or that there is a genuine issue requiring a trial. The court noted that there is no shifting onus, that the standard of proof is on a balance of probabilities, and that the persuasive burden of proof remains with the moving party.

Good faith, purpose of discretion, and PPSA rights

The defendant acknowledged the organizing principle of good faith in contractual relationships and referred to Wastech Services Ltd. v Greater Vancouver Sewerage and Drainage District, 2021 SCC 7, and Royal Bank of Canada v Universal Energy Resources Inc., 2021 MBCA 105. The court reproduced passages emphasizing that the duty to exercise contractual discretion in good faith is breached where the exercise of discretion is unreasonable in the sense that it is unconnected to the purposes for which the discretion was granted, and that the duty cannot be used to create new, unbargained-for rights or obligations or to alter the express terms of the contract. The court agreed with the defendant’s submission that there was no basis for arguing that Casera’s exercise of its discretion to make demand and enforce security was unconnected to the purposes for which it was granted the right to do so. The court held that the steps taken by Casera were pursuant to its contractual rights and exercised in relation to the purpose for which those rights were granted, namely the recovery of a debt. The court also referred to The Personal Property Security Act, C.C.S.M. c. P35, specifically section 57(2), which provides that, on default, a secured party is entitled to notify a debtor on an intangible to make payment to the secured party, to take control of proceeds to which it is entitled, and to apply money taken as collateral to the satisfaction of the secured obligation. The court concluded that the corporate plaintiffs had granted Casera the right to collect receivables as a matter of contract and that Casera was legally entitled under the PPSA to collect receivables upon default.

Rejection of plaintiffs’ theories and tort claims

The court held that the core facts of admitted default and the reasonableness of the notice entitled Casera to enforce its security in the manner it did. The corporate plaintiffs had no right, on the basis of contract and the circumstances, to insist that Casera realize against secured equipment rather than by way of the Receivables Letters. The court found that Casera’s exercise of its discretion was directly connected to the purpose of the security and was not in bad faith. The court was also mindful of the plaintiffs’ allegation that Casera interfered with their ability to obtain alternate financing but found no evidence to substantiate this allegation and reasoned that it would not make sense for Casera to prevent plaintiffs from obtaining alternate funding when it was trying to have the outstanding line of credit paid off and to terminate its relationship with them. The court rejected the plaintiffs’ argument that the circumstances gave rise to liability under the tort of unlawful interference with economic relations, holding that the tort can arise only where a defendant commits an unlawful act against a third party that intentionally causes economic harm to the plaintiff, and there was no evidence of any such unlawful act against a third party.

Disposition of corporate and individual claims

The court found that Casera acted in accordance with its contractual and legal obligations and did not act in bad faith, and therefore could not be liable for any losses the corporate plaintiffs alleged with respect to damages suffered from Casera’s efforts to realize on its security. Regarding the individual plaintiffs, the court noted that they were neither officers nor directors of the corporate plaintiffs and were not personally bound by the security agreements. Even accepting their position over Casera’s denials that there was a very brief freeze of their personal accounts, perhaps amounting to one day, there was no evidence that this was a breach of any obligation owed to them or that it caused damages. The court did not accept that Casera’s representatives or legal counsel made improper suggestions about the individual plaintiffs’ conduct beyond the plaintiffs’ own admission that they “misallocated” funds subject to Casera’s security. The allegation that counsel improperly suggested embezzlement was not supported by the evidence. The court agreed with the defendant that there was a complete lack of reliable evidence to support any claim by the individual plaintiffs.

Summary judgment outcome and costs

The court recognized that the persuasive burden of proof remained on the moving party, Casera, to establish that a fair and just adjudication was possible on a summary basis and that there was no genuine issue requiring a trial. The court was satisfied, on the basis of its reasons, that there was no genuine issue requiring a trial and that Casera had met its evidential burden. It found that the plaintiffs had failed to establish that the record, the facts, or the law precluded a fair disposition or that a trial was required. Summary judgment was therefore granted in favour of the defendant and the statement of claim was dismissed in its entirety. The defendant was entitled to its costs on the basis of the applicable tariff. If the parties were unable to agree on costs, they were permitted to submit written briefs on costs for the judge’s consideration. The exact monetary amount of costs in favour of Casera is not specified in the decision.