Executive Summary: Key Legal and Evidentiary Issues

• Quantum and proof of indebtedness exceeding $2 million under the bank’s credit facilities, together with evidence of reporting and payment defaults by the debtor corporations.
• Operation and enforceability of the general security agreements, including the bank’s contractual right to appoint a receiver and to recover enforcement costs on a full indemnity basis.
• Scope and validity of the personal guarantees given by the director, including his liability under the guarantees quantified at $1,988,777.37.
• Compliance with enforcement requirements under the Bankruptcy and Insolvency Act, specifically the issuance of section 244 notices and reliance on section 243(1) for appointment of a receiver.
• Use of rule 14.05 of the Rules of Civil Procedure to grant judgment on an application where no material factual dispute is raised by the guarantor or corporate debtors.
• Justification for appointing a receiver in light of nine months of default, lack of meaningful response from the respondents, and concerns about ongoing deterioration of the bank’s security.

Background and parties

This case arises from an application brought by the Royal Bank of Canada (RBC) seeking both the appointment of a receiver over two debtor corporations and judgment against their individual guarantor. The corporate respondents are Canadian Association Medical Aesthetics Inc. and 1000237264 Ontario Inc., privately owned companies with registered head offices in Richmond Hill, Ontario. Their principal asset is real property owned by the numbered company, located at 1200 Aerowood Drive in Mississauga, Ontario. The individual respondent, Amir Abbas Haydarian, is a director of both debtor companies, resides in Richmond Hill, and personally guaranteed the indebtedness owing to RBC. The proceeding was heard before Justice Derstine of the Ontario Superior Court of Justice by video conference on June 5, 2025.

Credit facilities and security structure

RBC advanced credit facilities to the two debtor corporations pursuant to written credit agreements. Those facilities left the companies indebted to the bank in the amount of $2,012,901.49. The credit arrangements were secured by general security agreements granted by the debtor corporations in favour of RBC. These security agreements covered the debtors’ assets and contained detailed terms governing events of default and enforcement remedies. Critically, the general security agreements expressly provided that upon default, RBC was entitled to the appointment of a receiver over the debtors. The agreements also contained an indemnity clause requiring the respondents to reimburse the bank, on a full indemnity basis, for “any and all” costs incurred in enforcing its security. In addition, Mr. Haydarian signed personal guarantees of the indebtedness of both corporate debtors. Each guarantee was capped at $1,100,000 per debtor, creating potential exposure of up to $2,200,000. For purposes of the application, the Court accepted that his obligations under the guarantees totalled $1,988,777.37. The guarantees also provided that the bank was not required to exhaust its remedies against the corporate debtors or any other guarantor before proceeding directly against him.

Default, demands, and statutory notices

The initial default arose from non-compliance with financial reporting obligations rather than from a missed payment. In October 2024, the debtor corporations failed to provide the periodic reporting required under the credit agreements. In late October 2024, a senior manager from RBC met with Mr. Haydarian to discuss the missing reports and requested that the necessary documentation be delivered by November 1, 2024. The documentation was not provided, and there was no further meaningful communication from the debtors or the guarantor after that meeting. On January 9, 2025, RBC formally demanded repayment of the indebtedness then due and owing under the credit facilities, including interest, costs, and expenses. At the same time, RBC issued and served notices of intention to enforce security pursuant to section 244(1) of the Bankruptcy and Insolvency Act (BIA) on the debtors and the guarantor. Despite receipt of these demands and statutory notices, neither the corporate debtors nor Mr. Haydarian contacted the bank or its counsel, and the indebtedness remained unpaid. Interest and legal fees continued to accrue, and the bank became increasingly concerned about the deterioration of its security position, particularly in relation to the real property asset.

Legal framework for receivership and judgment

Justice Derstine considered both the statutory and contractual foundations for the relief sought. Under section 243(1) of the BIA, the Court may appoint a receiver where it is “just and convenient” to do so in the circumstances. The Courts of Justice Act similarly empowers the Superior Court to appoint a receiver on that same broad test. In addition, rule 14.05 of the Rules of Civil Procedure allows the Court to grant judgment on an application where there does not appear to be any material fact in dispute. In this case, the evidentiary record showed no genuine dispute over either the existence or the amount of the indebtedness, or over the validity of the guarantees. The Court also emphasized the significance of the contractual terms agreed between the parties. By the general security agreements, RBC had obtained a contractual right to the appointment of a receiver upon default, separate from the statutory authority under the BIA. Justice Derstine referred to case law such as Callidus Capital Corp. v. CarCap Inc., which confirms that where a secured creditor’s security documents entitle it to a receiver on default, it is not necessary for the creditor to demonstrate irreparable harm or other equitable preconditions to obtain a receivership order. Once default is established, the secured creditor is in a legal and contractual position to enforce on its security. Regarding the guarantees, the Court noted that modern contractual principles favour enforcing negotiated guarantee and indemnity clauses absent compelling reasons to do otherwise. The guarantee documentation provided for full indemnity costs and for the guarantor to be immediately liable upon default, without a requirement that the bank first pursue the debtor corporations.

Positions of the parties at the hearing

The bank’s position was straightforward: the debtor corporations were in default, the debt remained unpaid, and the guarantor had not engaged meaningfully with RBC after service of demands and statutory notices. RBC sought appointment of a receiver over the debtors and judgment against the guarantor up to the quantified amount of his obligations. The bank also claimed its costs on a full indemnity basis, relying on the indemnity clauses in the security and guarantee documents. Mr. Haydarian appeared in person and also purported to represent the two corporate respondents. He did not deny signing the guarantees, nor did he contest the indebtedness or the occurrence of defaults. Instead, he asked the Court for more time to gather funds to pay the bank. Justice Derstine allowed the parties a brief opportunity to discuss potential settlement. However, no resolution was reached, and no substantive defence was advanced that could displace the clear contractual and statutory entitlements asserted by RBC. The Court found that, given the nine-month period of default, the absence of meaningful communication, and the lack of any material factual dispute, the criteria for relief on an application were satisfied.

Court’s reasoning and findings

Justice Derstine first held that default under the credit agreements and security documents had been clearly established. The debtors’ failure to provide required financial reporting in October 2024, followed by their failure to respond to the bank’s January 2025 demands and BIA notices, constituted events of default. The outstanding indebtedness of $2,012,901.49 was supported by the evidence and was not challenged by the respondents. Turning to the receivership, the Court accepted that the statutory test under section 243(1) of the BIA was met, given the protracted default, the lack of cooperation from the respondents, and the bank’s concern about the ongoing degradation of its collateral. Importantly, the Court stressed that the contractual provisions in the general security agreements independently entitled RBC to seek the appointment of a receiver upon default, without having to show irreparable harm. As to the guarantees, the Court found that Mr. Haydarian was properly served with the application and had ample opportunity to participate. He did not contest either his status as guarantor or his contractual obligations. The documentation showed that his obligations under the guarantees were quantified at $1,988,777.37, and that RBC was not required to exhaust its remedies against the debtor corporations or any other obligor prior to suing him. The Court reiterated that it should not ordinarily interfere with comprehensive guarantee and indemnity language that commercial parties have negotiated, and that the modern view is to uphold such clauses unless compelling reasons exist to depart from them. None were shown here. On the procedural front, Justice Derstine held that rule 14.05 of the Rules of Civil Procedure permitted the Court to grant judgment by way of application because there were no material facts in dispute that would require a trial.

Disposition, costs, and total monetary outcome

In the result, Justice Derstine granted the relief sought by RBC. The Court ordered the appointment of a receiver over the assets of the debtor corporations, as more fully described in the receivership order accompanying the written endorsement. In addition, the Court granted judgment in favour of RBC against the guarantor, Mr. Haydarian, up to the maximum amount of his quantified guarantee obligations, namely $1,988,777.37. With respect to costs, the Court applied the full indemnity provisions contained in the contract. RBC had filed a bill of costs in the amount of $22,106.39. Finding this amount reasonable in light of the contractual terms and the nature of the enforcement proceedings, Justice Derstine ordered that these costs be paid by the guarantor within 60 days. Accordingly, the successful party in this case was the Royal Bank of Canada, which secured both a receivership over the debtor companies and a personal judgment against the guarantor. The total quantified monetary amount ordered in favour of RBC was $1,988,777.37 in judgment against the guarantor plus $22,106.39 in full indemnity costs, for an aggregate of $2,010,883.76, exclusive of any additional interest and enforcement expenses continuing to accrue under the governing agreements.