Executive Summary: Key Legal and Evidentiary Issues

• Dispute over whether a consent order approving Minutes of Settlement in a shareholder dispute can be varied under rule 59.06(2) based on alleged fraud discovered after the order was made.
• Tension between the finality of a consent judgment embodying a contract and a party’s attempt to retroactively add security/payment-into-court obligations not contemplated in the original settlement.
• Allegations that Mr. Brenner secretly conspired with the purchaser of 434 Steeles Avenue to sell the property at an undervalue in breach of his fiduciary duties, with collateral benefits flowing back to him.
• Evidentiary conflict over whether documents such as a Memorandum of Understanding, a $3 million convertible loan, above-market interest, and funding of legal fees prove a fraudulent secret joint venture.
• Application of the strict test for a Mareva injunction, particularly the requirement to show a real risk of removal or dissipation of assets based on reasonable inferences from proven facts.
• Consideration of whether alleged fraudulent conduct alone, without concrete evidence of asset-stripping behavior, suffices to justify freezing liquid proceeds from a share sale.

Background and parties

David Brenner and Uri Saks were business partners for roughly 30 years, engaged in various real estate and development ventures through a number of jointly owned entities. Their relationship eventually broke down, spawning multiple related legal proceedings. One of those proceedings is an application brought by Mr. Brenner in 2014, in which he sought, among other relief, the winding-up of 1170057 Ontario Inc. (“117”), a corporation jointly owned by the parties. Another is an action (the “523 Action”) brought by Mr. Saks alleging that Mr. Brenner breached fiduciary duties in connection with the sale of a commercial property at 434 Steeles Avenue, Toronto, owned by 523910 Ontario Ltd., which was equally owned by Mr. Brenner and Mr. Saks. The decision in 2026 ONSC 2857 arises in the context of the Brenner application and addresses a motion by Mr. Saks seeking to secure funds associated with the purchase of Mr. Brenner’s shares in 117.

Shareholder settlement and the February 2019 consent order

In the Brenner application, the parties reached a settlement concerning their interests in 117. Under Minutes of Settlement dated February 25, 2019, Mr. Brenner agreed to sell his shares in 117 to Mr. Saks pursuant to a Share Purchase Agreement. The Minutes of Settlement set out the methodology for calculating the purchase price and allocated various amounts between the parties. One key term, paragraph 27, required that upon closing of the Share Purchase Agreement, Mr. Saks would pay Mr. Brenner an additional $71,000 over and above the share purchase price, in full satisfaction of certain outstanding costs orders previously made in the litigation. On February 25, 2019, Justice Hainey approved the settlement by a consent order (“the February 2019 Order”). That order was deliberately narrow: it simply approved the attached Minutes of Settlement and directed that the parties abide by their terms. No evidence was filed, no contested issue was argued, and there was no discussion of security or payment into court of the share sale proceeds. The sale of Mr. Brenner’s shares in 117 to Mr. Saks was later completed, and the resulting proceeds of $2,119,333.33 came under scrutiny in subsequent motions as the broader disputes between the parties continued.

Related litigation over 434 Steeles Avenue

Parallel to the shareholder settlement was the 523 Action, in which Mr. Saks sued Mr. Brenner over the sale of 434 Steeles Avenue, a commercial property owned by 523910 Ontario Ltd., an entity equally owned by the two men. Mr. Saks alleged that Mr. Brenner procured a court order for the sale of that property to 1880607 Ontario Limited (the “Tenant”) at a price of $12 million, which Mr. Saks says was below fair market value, and that Mr. Brenner thereby breached his fiduciary duties as a director and officer of 523. The 523 litigation was ongoing at the time of this motion. The allegations about 434 Steeles, and particularly about a purported secret arrangement between Mr. Brenner and the Tenant, became the foundation for Mr. Saks’ later efforts to vary the February 2019 Order and to obtain a Mareva injunction over the 117 share sale proceeds.

Alleged secret joint venture and the evidentiary record

In the motion underlying this decision, Mr. Saks advanced a detailed theory that newly uncovered evidence established a fraudulent secret joint venture between Mr. Brenner and the Tenant. According to Mr. Saks, the evidence showed a concealed arrangement to sell 434 Steeles to the Tenant at an undervalue and to divert collateral benefits to Mr. Brenner. The alleged indicia of fraud included: a February 2013 letter from the Tenant referencing a “Proposed Purchase and Joint Venture Agreement” with Mr. Brenner; the Tenant’s April 2015 $12 million offer for 434 Steeles followed shortly by Mr. Brenner’s court application seeking approval of that sale; substantial payment by the Tenant of Mr. Brenner’s legal fees in the 523 proceedings, including a retainer before the offer was made; a Memorandum of Understanding (MOU) between Mr. Brenner and the Tenant executed in 2018; and a $3 million DBI Loan from Mr. Brenner to the Tenant, convertible into a 25% equity interest in the Tenant’s property interest regardless of whether that share exceeded the $3 million principal. Mr. Saks argued that the above-market 10% interest rate on the DBI Loan, the absence (in his view) of clear proof that the full $3 million was advanced, the substantial interest payments actually received by Mr. Brenner, and the Tenant’s payment of legal fees all pointed to a covert scheme to reward Mr. Brenner for steering the 434 Steeles sale to the Tenant at a bargain price. He further relied on a handwritten note by Mr. Brenner, which he said described a “plot” with the Tenant to accept the $12 million offer instead of a higher competing $14.6 million offer that Mr. Saks favoured. Mr. Brenner categorically denied participating in a fraudulent joint venture. He explained that the 2013 letter contained a drafting error, that the Tenant’s offer exceeded a professional valuation and was subject to court oversight, and that Mr. Saks had an opportunity to match the offer. He stated that the application to approve the sale was necessary because Mr. Saks opposed the Tenant’s proposal, leaving the corporation in deadlock. Regarding legal fees, Mr. Brenner said third-party funding of counsel is not inherently suspicious and that the fees had been repaid. He emphasized that the MOU and DBI Loan were negotiated and executed only after the court had already approved the sale and appeals were unsuccessful, making them post-sale commercial arrangements rather than evidence of a pre-sale scheme. He also produced the cheque and closing documents showing that the loan funds were advanced and that interest was being paid as agreed. Finally, he noted that parties may freely negotiate interest rates in private lending deals, and that his decision not to exercise remedies against the Tenant despite technical default did not amount to wrongdoing. The judge did not resolve the fraud allegations on the merits in this motion. Instead, the court accepted that for purposes of analysis it could assume a strong prima facie case of the alleged fraudulent conduct and then consider whether that conduct justified the relief sought—namely variation of the consent order and a Mareva injunction.

The motion to vary the consent order under rule 59.06(2)

The first branch of Mr. Saks’ motion sought to vary the February 2019 Order under rule 59.06(2) of the Rules of Civil Procedure, which allows a party to move to set aside or vary an order on the ground of fraud or new facts discovered after the order was made. Specifically, he asked the court to: remove paragraph 27 of the Minutes of Settlement (the $71,000 additional payment to Mr. Brenner accounting for earlier costs orders); and add a new provision directing that the $2,119,333.33 in share sale proceeds payable to Mr. Brenner instead be paid into court as security pending the outcome of the 523 Action and a companion “117 Action” in which he sought an accounting of another company, UriDave Developments Inc. The court examined the nature of the February 2019 Order and emphasized that it was a consent order approving a private contract—the Minutes of Settlement—between sophisticated parties, with no contested issues or evidence before the judge at that time. Justice Cavanagh considered appellate authority on the treatment of consent judgments, in particular Monarch Construction Ltd. v. Buildevco Ltd., which held that a consent judgment that embodies a contract can only be amended on the same narrow grounds that justify rectifying a contract, such as when the written document does not reflect the true agreement of the parties or where fraud in the specific sense required for rectification is proven. The judge also reviewed the Supreme Court of Canada’s decision in Performance Industries Ltd. v. Sylvan Lake Golf & Tennis Club Ltd., which explains that rectification is an equitable remedy intended to prevent a written instrument from being used as an “engine of fraud” where the terms have been mistakenly recorded and one party seeks to exploit the error. Applying these principles, Justice Cavanagh found that Mr. Saks was not alleging the kind of error that rectification addresses. He did not say that the Minutes of Settlement, including paragraph 27, had been incorrectly drafted, that they failed to capture the parties’ true agreement, or that Mr. Brenner was trying to rely on a mistaken term he knew to be wrong at the time of execution. Instead, Mr. Saks essentially asked the court to rewrite the bargain retroactively to divert proceeds away from Mr. Brenner and convert them into security for unrelated claims in other proceedings based on subsequent allegations of misconduct. In the judge’s view, rule 59.06(2) cannot be used to amend the substantive terms of a contract embodied in a consent order in this way. The court distinguished the authorities relied on by Mr. Saks, such as International Corona Resources Ltd. v. LAC Minerals Ltd., noting that those cases dealt with setting aside trial judgments where evidence had been heard and perjury or material fraud was later discovered, not with revisiting a consent order approving a settlement agreement. Because the February 2019 Order simply ratified a contract and involved no adjudication, varying it to add a requirement to pay funds into court as security would go well beyond correcting fraud in the making of the order; it would amount to judicially rewriting the parties’ bargain. As a result, the judge held that the motion to vary the consent order was misconceived and declined to grant any relief under rule 59.06(2).

The request for a Mareva injunction over the share sale proceeds

In the alternative, Mr. Saks sought a Mareva injunction restraining Mr. Brenner from dissipating or otherwise dealing with the $2,119,333.33 in proceeds from the sale of his shares in 117, pending determination of the 523 Action. He argued that the various proceedings were interrelated, that the necessary pleadings and evidence were already before the court, and that it was just and convenient to hear the Mareva request in the context of the Brenner application. The judge accepted that the motion could properly be brought in this proceeding rather than directly in the 523 Action, given their connection. The legal test for a Mareva injunction is strict. The moving party must demonstrate a strong prima facie case, particularize the underlying claim and its amount, show that the defendant has assets in the jurisdiction, and, crucially, establish a real risk that those assets will be removed or dissipated so that any judgment will be unsatisfied. An undertaking as to damages is also required. Mr. Saks contended that in fraud cases, the risk of dissipation may be inferred from the fraudulent conduct itself and the surrounding circumstances, relying on the reasoning in Sibley & Associates LP v. Ross. He argued that the alleged “badges of fraud” surrounding the 434 Steeles transaction, the liquid nature of the share sale proceeds, and Mr. Brenner’s denials of any secret joint venture—including in sworn evidence—together supported an inference that Mr. Brenner would move or dissipate his assets to frustrate enforcement of a future judgment. Justice Cavanagh reviewed Sibley and related case law and accepted that in some circumstances, particularly in fraud cases, the risk of dissipation may indeed be inferred from a proven pattern of deceptive conduct. However, the judge emphasized that any inference must logically and reasonably flow from established facts. It is not enough to show that the defendant has committed fraud in one context; the evidence must support a serious and concrete risk that the defendant will now hide, transfer, or deplete assets. On the record before the court, that crucial link was missing. Even assuming a strong prima facie case of a fraudulent secret agreement between Mr. Brenner and the Tenant, there was no evidence that Mr. Brenner, a Toronto resident, had moved assets out of Ontario, concealed them, destroyed financial records, or used nominees to put property beyond the reach of creditors. Unlike in some fraud cases where defendants had already engaged in asset-stripping behavior, none of the alleged misconduct here directly involved dissipation of Mr. Brenner’s own assets. The fact that the share sale proceeds were liquid and potentially easy to move was not enough on its own. Nor did Mr. Brenner’s alleged misrepresentations about the joint venture automatically justify inferring that he intended to frustrate enforcement of a judgment. Because the evidentiary record did not support a reasonable, fact-based inference of a real risk of dissipation, the court held that Mr. Saks failed to meet this essential element of the Mareva test. It was therefore unnecessary for the judge to decide whether Mr. Saks had established a strong prima facie case on the merits, and the request for a Mareva injunction was dismissed.

Court’s ruling and overall outcome

In the result, Justice Cavanagh dismissed Mr. Saks’ motion in its entirety. The court refused to vary the February 2019 consent order under rule 59.06(2), holding that a consent judgment approving a settlement agreement will not be rewritten to create new security obligations absent the narrow circumstances justifying rectification of a contract. The alternative request for a Mareva injunction over the $2,119,333.33 in share sale proceeds also failed because, even assuming a strong prima facie case of fraud, Mr. Saks did not establish a real, evidence-based risk that Mr. Brenner would remove, dissipate or otherwise shield those funds from collection. As to costs, the judge did not fix any monetary figure in this endorsement. Instead, he invited the parties to attempt to agree on costs and, failing agreement, to make written submissions on a timetable to be approved by the court. Accordingly, while David Brenner is the successful party on this motion, no specific amount of costs, damages or other monetary award was determined or ordered in his favour in this decision, and the total monetary benefit to him from this ruling cannot be ascertained from the judgment alone.