r v. JOSEPH FAHS, 2012 QCCA 1876

Marciano (Séquestre de) 2012 QCCA 1876 COURT OF APPEAL CANADA PROVINCE OF QUEBEC REGISTRY OF MONTREAL No: 500-09-022040-117 (500-11-041322-112) DATE: October 23, 2012 CORAM: THE HONOURABLE ANDRÉ ROCHON, J.A. PIERRE J. DALPHOND, J.A. NICHOLAS KASIRER, J.A. IN RE: GEORGES MARCIANO GEORGES MARCIANO APPELLANT - Debtor v. JOSEPH FAHS STEVEN CHAPNICK ELIZABETH TAGLE RESPONDENTS – Petitioners and PRICEWATERHOUSECOOPERS INC.

INTERIM RECEIVER – Interim Receiver and DAVID GOTTLIEB IMPLEADED PARTY – Impleaded party JUDGMENT [ 1 ] On appeal from a Judgment of the Superior Court, District of Montreal, rendered on September 15, 2011 (the Honourable Madam Justice Chantal Corriveau), granting ex parte the respondents' motion to appoint an interim receiver under s. 46 of the Bankruptcy and Insolvency Act , R.S.C. 1985, c.

B-3 (BIA). [ 2 ] For the reasons of Dalphond, J.A., with which Rochon and Kasirer, JJ.A. agree; THE COURT de bene esse : [ 3 ] ALLOWS the appeal, with costs on a solicitor-client basis against the respondents; [ 4 ] SETS ASIDE the orders made at the request of the respondents; and [ 5 ] DISMISSES the respondents’ Motion to Appoint an Interim Receiver (section 46 of the Bankruptcy and Insolvency Act ). ANDRÉ ROCHON, J.A. PIERRE J. DALPHOND, J.A. NICHOLAS KASIRER, J.A. Mtre Jean-Yves Fortin Mtre Mélanie Martel Mtre Hubert Sibre

DAVIS For the appellant Mtre Bernard Boucher Mtre Réal A. Forest Mtre Caroline Dion BLAKE, CASSELS & GRAYDON For the respondents Joseph Fahs, Steven Chapnick and Elizabeth Tagle and for the impleaded party Mtre Martin Desrosiers Mtre Alexandre Fallon OSLER, HOSKIN & HARCOURT For PricewaterhouseCoopers inc.

Date of hearing: March 28, 2012 REASONS OF DALPHOND, J.A. [ 6 ] These reasons deal with an appeal brought by Georges Marciano from a judgment rendered by the Honourable Madam Justice Chantal Corriveau of the Superior Court, District of Montreal, on September 15, 2011, granting ex parte the respondents' motion to appoint an interim receiver under s. 46 of the Bankruptcy and Insolvency Act , R.S.C. 1985, c. B-3 (BIA). [ 7 ] The facts are summarized in a related judgment released concurrently, Fahs, Chapnick and Tagle v.

Marciano et al. , 500-09- 022220-115. [ 8 ] For the purpose of this appeal it suffices to say that the respondents are part of a group of creditors pursuant to civil judgments of the California Superior Court condemning the appellant to pay them over US$260,000,000 that have petitioned him into bankruptcy.

On December 28, 2010, their petition was granted by a US bankruptcy judge despite the fact that the civil judgments were subject to pending appeals and could thus be considered subject to a bona fide dispute. [1] [ 9 ] In September 2011, the respondents petitioned the Montreal Superior Court to have the appellant declared a bankrupt under s. 43 of the BIA , concurrently with a motion to appoint an interim receiver under s. 46 of the BIA. This second motion was presented ex parte on September 14 and 15, 2011 and granted on September 15, 2011.

PricewaterhouseCoopers Inc. (PWC) was then appointed as interim receiver. [ 10 ] In my view, this motion should have been dismissed. [ 11 ] Once authorized by the US Bankruptcy Court, the respondents were indeed entitled to petition the Montreal Superior Court to have Marciano declared a bankrupt under the BIA ( s. 43 BIA) and to appoint an interim receiver ( s. 46 BIA).

However nothing justified them to proceed ex parte once the foreign main proceeding recognition order issued and the order made to Marciano not to sell or otherwise dispose of his property in Canada. [ 12 ] Corriveau J. should have held that the respondents' motion for the appointment of an interim receiver could have waited until a subsequent hearing was convened in the ordinary adversarial forum rather than ex parte .

In that content the respondents would have had to establish their claims considering their nature, the likelihood of a major reduction of them by a higher civil court, the extent of the assets of Marciano in Canada and the fact that there was no sign whatsoever that he could meet his obligations as they become due. [ 13 ] For these reasons, I propose to allow de bene esse the appeal, with costs on a solicitor-client basis against the respondents, to annul the orders made on September 15, 2011 by Justice Corriveau at the request of the respondents and to dismiss their Motion to Appoint an Interim Receiver (section 46 of the Bankruptcy and Insolvency Act ), dated September 13, 2011.

PIERRE J. DALPHOND, J.A.