slatter, rowbotham and o'ferraLl jJA

6.25: Preserving or protecting property or its value

Case Summary

The Respondent, Gemba Fund One LLC, had obtained an Injunction and an Attachment Order preventing the Appellant from dissipating property that was claimed by both parties. The Appellant appealed on the basis that the Chambers Judge erred in making the Order by: (1) misapplying section 17 of the Civil Enforcement Act; (2) misapplying the common law test from Canadian Imperial Bank of Commerce v Credit Valley Institute of Business and Technology, 2003 CanLII 12916 (ON SC), [2003] OJ No 40 (QL) (“Credit Valley”); and (3) generally misweighing the evidence.

The Court noted that Rule 6.25(1)(a) gives the Court the authority to make an Order for the preservation of property that is in dispute or may be evidence in an Action. The Majority of the Court of Appeal held that the Chambers Judge properly applied section 17 of the Civil Enforcement Act, and that the Chambers Judge’s decision (that considered the test under Credit Valley and held that the Respondent had established a prima facie case for their proprietary interest in all of the funds) was reasonable. The Court noted that the purpose of the test in Credit Valley is to ensure a Defendant is able to fund its defence – but here, the Appellant sought the funds for outstanding legal fees from a previous Action. The Claim was therefore not congruent with the purpose of the test in Credit Valley. The Appeal was therefore dismissed.

O’Ferrall J.A. agreed concurred in the result, but observed that a distinction should be made between past and current legal fees, as both types of fees are Court ordered. O’Ferrall J.A. emphasized that the four-step test from Credit Valley applies when at least some of the funds in question are not subject to the Claim – whereas in this case there was a presumption that the Respondent had an interest in all of the funds.

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