Executive Summary: Key Legal and Evidentiary Issues

• The application sought a second receivership order over property already subject to an earlier, since-discharged RBC receivership.
   
• Respondents challenged the relief on grounds that a further receivership was neither just nor convenient and was statute-barred.
   
• Unsupported allegations of collusion between RBC and the Applicant were raised but not substantiated with direct evidence.
   
• Safety concerns involving roof failure and electrical hazards at the Real Property remained unresolved despite a tenant's continued occupancy.
   
• Limitation issues turned on whether the Real Property Limitations Act's 10-year period, rather than the two-year Limitations Act period, applied.
   
• Case law on the court's jurisdiction to re-appoint a receiver following an earlier discharge order was central to the analysis.
   

Facts of the case

The Lawrence Phoenix Inc. (the Applicant) applied under s. 243(1) of the Bankruptcy and Insolvency Act and s. 101 of the Courts of Justice Act for the appointment of AlixPartners as Receiver over the assets, properties and undertakings of 2531961 Ontario Inc. and Melania Augustin (the Respondents), including a Real Property, and for approval of a proposed Sale Process. This request came against the backdrop of an earlier receivership: RBC had commenced receivership proceedings on August 24, 2023 against the Debtor and against Ms. Augustin and Mr. Smith as guarantors, obtaining an order on February 29, 2024 appointing FLG as receiver. RBC later sought and obtained the discharge of that receiver by order dated May 11, 2026, after determining, based on an environmental remediation proposal obtained in April 2025, that clean-up costs undermined the prospects for a cost-efficient sale of the Real Property. Following the discharge, RBC assigned certain security and indebtedness to the Applicant under an Assignment Agreement executed June 5, 2026, comprising the 253 GSA, a $15.2 million Collateral Charge, a $1 million 253 Guarantee relating to amounts borrowed by TNT International Leasing Inc., and Assigned Indebtedness totaling approximately $13.7 million. RBC did not assign approximately $2 million owing under the 253 Credit Agreement, and separately retained a $3.55 million personal guarantee given jointly and severally by Ms. Augustin and Mr. Smith. On June 19, 2026, the Applicant issued its own repayment demands together with notices of intention to enforce security under s. 244 of the BIA; the Debtor did not respond and made no payment. The Real Property had deteriorated to the point that the prior RBC Receiver directed the remaining tenant, operating a retail mattress store, to vacate due to roof failure and electrical hazards, though the tenant had not done so, and the status of insurance coverage on the property was uncertain. In response, the Respondents' affidavits described unidentified individuals appearing at the property and threatening to change the locks, prompting police involvement, along with unspecified threatening phone calls, and Ms. Augustin disputed the environmental contamination findings relied on by RBC, asserting that unnamed consultants had found contamination only to a depth of approximately sixteen feet.

Policy and legislative provisions at issue

The application engaged s. 243(1) of the BIA and s. 101 of the CJA as the statutory basis for appointing a receiver. Under the 253 GSA, the Applicant was entitled, on default, to appoint a receiver over the Debtor's collateral, including the Real Property. On the limitation question, the Respondents invoked the two-year limitation period under the Limitations Act, 2002, while the Applicant relied on the 10-year limitation periods under ss. 43(1) and 23(1) of the Real Property Limitations Act (RPLA), governing actions on a mortgage covenant to repay and actions to recover a sum secured by a mortgage or lien out of land, respectively.

Reasoning and analysis

Justice Black rejected the Respondents' collusion allegation as unsupported by direct or specific evidence and inconsistent with any rational incentive a creditor would have to depress the value of its own collateral. On whether a second receivership could be just and convenient, the court relied on West Face Capital Inc. v. Chieftain Metals Inc., 2020 ONSC 5161, in which Morawetz CJC held that the court retains jurisdiction to order the re-appointment of a receiver in appropriate circumstances, and on Environmental Waterproofing Inc. v. Huron Tract Holdings Inc., 2023 ONSC 405, which confirmed that this jurisdiction does not depend on the original discharge order expressly preserving the possibility of re-appointment, since discharge of a receiver does not terminate a secured creditor's underlying security interest or enforcement rights. Applying these principles, the court found the Applicant's request reasonable given its clear security rights under the 253 GSA, the ongoing deterioration and safety issues at the Real Property, and the Respondents' failure to offer any constructive alternative. On limitation, the court found the receivership application to be, at its core, a mortgage enforcement proceeding governed by the RPLA rather than the Limitations Act, 2002, citing The Equitable Trust Company v. Marsig et al., 2012 ONCA 235 for the proposition that the RPLA extends to enforcement of a mortgage guarantee, and 1250140 Ontario Inc. v. Bader, 2022 ONCA 197 and Mikhallova v. Dabic, 2025 ONSC 7201 for the proposition that the RPLA continues to apply even after disposition of the real property. The court further noted that acknowledgment of debt by the Respondents throughout and since the first receivership could independently refresh any applicable limitation period, citing Bank of Nova Scotia v. Reed, 2025 ONCA 445. The court also observed that a related argument, that the Assignment Agreement was improvident, had already been dismissed by Myers J. at a July 16, 2026 case conference.

Ruling and overall outcome

Justice Black granted the Applicant's application, appointing AlixPartners as Receiver over the Debtor's assets, properties and undertakings, including the Real Property, and approved the proposed Sale Process as reasonable and appropriate. The endorsement does not grant, order, or quantify any monetary award, damages, or costs; Not Specified — the decision concerns the appointment of a receiver and approval of a sale process rather than a monetary judgment.