) ) MNP LTÉE Applicant – v. –, 2017 ONSC 6268

CITATION : MNP Ltée. v. Armorer, 2017 ONSC 6268 COURT FILE NO.: 16-68482 DATE: 20171019 ONTARIO SUPERIOR COURT OF JUSTICE BETWEEN: ) ) MNP LTÉE Applicant – and – AUDIE ARMORER and MARCEL VILLENEUVE Respondents ) ) ) ) ) ) ) ) ) ) ) ) ) ) Karen Perron, for the Applicant Benoit Duchesne, for the Royal Bank and Bank of Montreal Kurt Anders, for Marcel Villeneuve Courtney West, for the Attorney General of Canada Francis Donovan, on a limited retainer for MNP, and former solicitor for Mr. Villeneuve ) ) ) ) HEARD: June 8, 2017 followed by written submissions June 20, 2017 REASONS FOR decision Beaudoin J.

Introduction [ 1 ] This is a motion by the Liquidator, MNP LTÉE (MNP), to update the court as to the Liquidator’s activities since the issuance of the Approval and Vesting Order and to seek approval of the Liquidator’s fees and disbursements, including fees and costs of its counsel. In addition, the Liquidator seeks direction with respect to the distribution of the net proceeds of the liquidation amongst the various stakeholders and seeks to be discharged following the completion of the said distribution.

Background [ 2 ] On March 4, 2014, pursuant to the oral judgment of Justice Catherine Mandeville of the Quebec Superior Court, MNP was appointed as court-appointed Liquidator with respect to the partnership assets of Marcel Villeneuve and Audie Armorer. The judgment was rendered by default following a lengthy court proceeding between Villeneuve and Armorer which commenced in or about 2002. The Liquidation Judgment dissolved the partnership and provided that Villeneuve would be entitled to receive 50% of the proceeds from the liquidation plus the amount of $67,691.50 plus interest from March 7, 2001.

MNP was directed to distribute the proceeds of the liquidation pursuant to the terms of the said judgment. The judgment further provided that Armorer would be liable to pay the costs and fees of the liquidation. [ 3 ] Following its appointment, the Liquidator obtained an appraisal of the property and, prior to listing the property for sale on the open market, it concluded that it would be more cost effective to first inquire if either partner wished to purchase the other’s half interest in the property.

Each partner was notified of the proposed sale process and asked to submit an Offer to Purchase by August 14, 2014. The only partner that delivered an offer was Villeneuve. Armorer did not object. The Liquidator accepted Villeneuve’s revised offer on January 9, 2015.

[ 4 ] The Liquidator subsequently incurred numerous obstacles completing its mandate effectively as extensively set out in the affidavits of Sheri Aberback, Senior Vice-President of MNP. The Liquidator was required to re-attend at the Quebec Superior Court on December 5, 2014 to modify and clarify the Liquidation Judgment due to Royal Bank of Canada (RBC)’s request for clarification and Armorer’s contestation of the terms of the Liquidation Judgment. [ 5 ] The Court declared that the RBC account was part of the partnership assets to be liquidated by MNP.

After receiving the modified judgment, RBC agreed to release the funds in the partnership account to the Liquidator. [ 6 ] The Liquidator was then required to attend court in Ontario in 2015 to have the Liquidation Judgment recognized in Ontario in order to complete the transaction. The Liquidator attempted to do so with the consent of the partners but Armorer withdrew his consent and renewed his objections to the sale process.

The Liquidation Judgments were recognized (ultimately on consent) on January 20, 2016. [ 7 ] In early February 2016, the Liquidator’s counsel communicated with Villeneuve and Armorer’s solicitors and proposed a process for completing the transfer of the property to Villeneuve.

Armorer, via his counsel, renewed his objections to the process, objected to the Liquidator’s fees and challenged Liquidator’s entitlement to recover its legal fees. [ 8 ] By the end of March, 2016, the Liquidator’s counsel was attempting to close the transaction when it discovered that the Ministry of National Revenue (CRA) had registered a tax lien against Armorer. In addition, it discovered that two executions had been previously registered against Armorer by RBC and by the Bank of Montréal (BMO). As a result, the Liquidator was required to bring an application for an Approval and Vesting Order.

By this time, Armorer was acting as a self-represented litigant. [ 9 ] The Liquidator first reported to the Court by way of affidavit sworn April 29, 2016. The hearing in support of the Approval and Vesting Order was returnable on May 13, 2016, however, the matter was adjourned at the request of the other stakeholders and the Liquidator was directed to obtain an updated appraisal of the property. [ 10 ] The updated appraisal was obtained on June 9, 2016. BMO and RBC also obtained an appraisal of the property.

Following receipt of these appraisals, the Liquidator provided a fresh opportunity to each partner to submit an offer to purchase the other partner’s half-interest in the property. Villeneuve submitted a revised (increased) offer. Armorer did not submit an offer nor did he object to the renewed sale process. [ 11 ] The return of the Application was scheduled for October 25, 2016. The Liquidator provided the court with further reports but the Application had to be adjourned to February 3, 2016. On that date, I issued two orders:

a) the Approval and Vesting Order approving the transaction; and

b) the Order granting a first charge to the Liquidator for its fees and disbursements, including fees incurred by its counsel. [ 12 ] The Liquidator prepared a third supplementary affidavit and report for the purpose of updating the court on the Liquidator’s activities; seeking approval of the Liquidator’s fees and disbursements including the fees and costs of its counsel; seeking direction from the court with respect to the distribution of the net proceeds and obtaining final approval of the Liquidator’s activities, and confirming its discharge following the distribution of the net proceeds. [ 13 ] In accordance with the Approval and Vesting Order, the Liquidator completed the transaction pursuant to which Villeneuve purchased Armorer’s half interest in the property for the sum of $210,000.

The transaction closed on March 1, 2017. [ 14 ] In accordance with the Approval Vesting Order, the Liquidator delivered its Liquidator’s certificate to Villeneuve and filed it with the court the same day, May 23, 2017. Statement of Receipts and Disbursements [ 15 ] The Liquidator prepared a detailed statement of receipts and disbursements and is currently holding $218,699.87 in trust, however, it has unpaid fees and costs in the amount of $134,029.39 which sum includes estimated fees and legal fees to closing of the file.

Subject to the approval of the Liquidator’s total fees and costs, including fees and costs of its legal counsel, the net proceeds of liquidation total approximately $84,670.08. The Statement of Receipts and Disbursements is attached as

Schedule “A” to these Reasons. Liquidator’s Fees and Disbursements [ 16 ] The Liquidator has prepared a detailed statement of account for the period April 1, 2014 to May 18, 2017 which includes a

summary of the time charges and applicable hourly rates. The Liquidator has applied the sum of $46,604.83 towards its fees from the proceeds held in trust. The outstanding amount that remains unpaid is $48,404.96 (inclusive of the Liquidator’s estimated fees to closing of the file $13,500 plus taxes). Fees and Disbursements of the Liquidator’s Counsel [ 17 ] The Liquidator states that in order to affect its mandate and to respond to the oppositions met by the Liquidator, it was necessary to retain legal counsel. The Liquidator retained three different counsel throughout the course of its mandate.

For the period March 27, 2014 to May 21, 2017, the fees and disbursements of the Liquidator’s counsel total $126,305 (inclusive of estimated fees to closing of the file.) [ 18 ] The breakdown of these fees and disbursements is as follows:

a) The sum of $17,797.27 was paid to the firm of Ravinsky, Ryan Lemoine (Ravinsky, Ryan) or the primary purpose of bringing the motion to modify and clarify the Liquidation Judgment.

b) As the partnership assets were located in Ontario, and as a matter became litigious, the Liquidator subsequently retained the firm of Low Murchison Radnoff LLP (Low Murchison).They delivered three accounts in the total amount of $8336. The Liquidator was not satisfied that Low Murchison was moving the file along quickly and terminated their services in the early October 2015. The liquidator ultimately paid $6,962.81 to settle Low Murchison’s accounts.

c) The Liquidator then received another invoice from Ravinsky Ryan on October 21, 2015 in the amount of $10,431.81 on account of services rendered at the request of Low Murchison in support of the recognition of the Liquidation Judgment in Ontario. The Liquidator has not yet paid this account as it was not aware that Ravinsky, Ryan would render an invoice in connection with the services. It seeks direction from the court regarding the approval of these fees.

d) The Liquidator subsequently retained Borden Ladner Gervais LLP (BLG) in October 2015. BLG has issued a total of five invoices in the total aggregate amount of $78,465.86. BLG estimates the cost to complete all work relating to the liquidation will not exceed $11,500 plus taxes. The Claims of other Stakeholders [ 19 ] The following are the claims of other stakeholders:

a) The Liquidation Judgment dated March 4, 2014 granted judgment to Villeneuve in the amount of $67,691.50 plus interest from 2001. The judgment also provides that Villeneuve is entitled to 50% of the proceeds of the liquidation.

b) CRA registered a tax lien against Armorer on March 3, 2016 in the amount of $116,949.65 plus interest.

c) RBC registered in execution against Armorer on August 13, 2013 in the amount of $34,832.17 plus interest and costs.

d) The BMO registered in execution against Armorer on December 7, 2015 in the amount of $31,387.46 plus interest and costs. [ 20 ] The net proceeds of the liquidation, namely $84,670.08 are not sufficient to satisfy the totality of the above-noted claims. In addition, the Liquidator received an irrevocable direction from Ravinsky, Ryan directing the Liquidator to remit to them up to $42,744.64 from any sums that may be come due to Villeneuve in the liquidation. [ 21 ] An issue arose as to whether the Liquidator’s Final Report should be delivered to the Superior Court in Quebec or here in Ontario.

Since the judgment had been recognized in Ontario and the liquidation of the assets occurred in Ontario, I concluded that this Court could receive the Liquidator’s Final Report and make the final determination of the Liquidator’s accounts having regard to the provisions of the Civil Code of Quebec . (CcQ) The Position of the Parties The Liquidator [ 22 ] The Liquidator maintains that its accounts accurately reflect the time spent by MNP professionals, along with the hourly rates as well as the disbursements incurred.

Additional time was also incurred by MNP in respect of administrative and other tasks but those fees have been internally written off. Hourly rates are comparable to the rates charged for the provision of similar services by other firms in the Montréal and Ottawa area markets. [ 23 ] The Liquidator maintains that the fees charged by its counsel are fair, reasonable and justified in the circumstances and accurately reflect the work done on behalf of the Liquidator’s mandate. Mr. Villeneuve [ 24 ] Mr.

Villeneuve takes the position that he is first entitled to receive $67,691. 50 + interest calculated at $55, 577.94 for a total

of $123,269.44 He claims that the Quebec judgment granted him an unequal division of the proceeds of the liquidation. He further claims that the Liquidator’s fees in the total amount of $221,183.35 are excessive having regard to the $218,699 it now holds in trust. BMO and RBC [ 25 ] BMO and RBC rely on

article 1300 of the CcQ which provides that a liquidator is entitled to remuneration which, if not specifically fixed otherwise is to be determined according to the value of the services rendered. Expenses incurred by the Liquidator must be determined in accordance with the same standard.

BMO and RBC submit that the Liquidators’ fees are neither fair nor reasonable and should be reduced to $118,225.33 after applying a 2:1 ratio where the value of the gain for the estate to be liquidated is twice as much as the remuneration and the expenses charged. [ 26 ] BMO and RBC rely on the fact that the expenses incurred by MNP were as a result of its efforts to realize against assets located in Ontario, one of which was the bank account for which there was no opposition.

It submits that while MNP had issues when seeking to have the judgments from the Court of Quebec recognized and made enforceable in Ontario, it then incurred unreasonable expenses and retained three law firms for the recovery of a single remaining asset. [ 27 ] BMO and RBC propose that the net liquidation proceeds be paid in accordance with the original judgment by Justice Mandeville, specifically that the liquidation costs are to be paid alone by Armorer and that 50% of the remainder distributed to Villeneuve and the other creditors on a pro rata basis.

CRA [ 28 ] CRA takes a similar position to RBC and BMO, and although the Crown could claim a priority under various statutory provisions, it is prepared to accept a pro rata distribution of the net proceeds to bring the litigation to a close and minimize further waste of the parties’ and the court’s time.

Interpretation of the Oral Judgment of March, 4 2012 [ 29 ] At the close of the hearing on June 8, Mr. Donovan made representations with regard to the March 4, 2014 oral judgment delivered in the Quebec proceedings. According to Mr. Donovan, the operative part of the judgment pertaining to the division of the partnership assets is not an equal distribution plus damages award, but in fact a judgment ordering the unequal distribution of partnership assets following the court-ordered liquidation of an undeclared partnership governed by the Civil Code of Quebec . As such, he supports Mr.

Villeneuve’s view that he has priority claim over the liquidation receipts of $123,269.44. [ 30 ] Counsel for the Liquidator then requested an opportunity for the parties to make additional written submissions on this issue. I gave further directions to the parties to make additional written submissions in the matter which submissions were not to exceed two pages and with no right of reply by June 20, 2017.

Discussion [ 31 ] The relevant part of the judgment reads as follows: Déclare que la valeur de la part (50%) de Monsieur Villeneuve dans ladite société équivaut à la moitié d’un produit de la liquidation des actifs de la société majorée d’une somme de 67, 691, 50 $ à laquelle s’ajoutent l’intérêt et l’indemnité additionnelle depuis le 7 mars 2001. [ 32 ] Mr.

Villeneuve takes the position that the judgment stated that the value of his partnership is the equivalent to one half of the proceeds of the liquidation of the assets of the partnership increased by the sum of $67,691.50 to which are added interest and the additional indemnity from March 7, 2001. In support of this, he has enclosed a letter from Mr. Donovan who was his counsel in the Quebec proceedings. [ 33 ] Mr. Donovan points out that, in the Quebec proceedings, Villeneuve had alleged that Armorer had made unauthorized withdrawals of substantial sums of money from an account belonging to the partnership.

Villeneuve therefore asked not only that the partnership be liquidated and that he receive a 50% share of the proceeds, but also that he be paid his 50% share of the amount of the

partnership funds misappropriated by Armorer. At trial, the judge determined that Armorer had indeed made unauthorized withdrawals of the partnership funds, half of which, or $67,791.50 belonged to Villeneuve. Donovan submits that the judge effected an unequal partition of the then existing partnerships assets in order to arrive at a true 50-50 partition of the assets between the former partners. He submits that Villeneuve is not a judgment creditor of Armorer; that he is simply entitled to a greater share of the liquidated partnership assets. [ 34 ] Not surprisingly, the Liquidator does not agree with this

interpretation and maintains that it is inconsistent with the actual terms of Liquidation Judgment. In the alternative, if the court accepts Mr. Donovan’s submissions, the Liquidator argues that this does not change the first ranking priority charge of the Liquidator for its fees and costs for the whole of the liquidated property of the partnership as ordered by this Court on February 3, 2017. [ 35 ] The Liquidator submits that the comments made by Mr. Donovan ought not to be considered as he has not provided any affidavit evidence before the court.

The parties had no notice of this evidence nor did they have an opportunity to challenge it or reply to it. In addition, the Liquidator states that Mr. Donovan did not have standing to make submissions on this issue given that Villeneuve had counsel present. In addition, the Liquidator notes that Villeneuve owes significant fees to Mr. Donovan arising out of the Quebec proceedings and that Mr. Donovan’s arguments favouring an unequal division of the partnership assets in favour of his former client suggest the appearance of a conflict of interest. [ 36 ] Moreover, the Liquidator notes that Mr.

Donovan’s comments are incompatible with and contrary to the evidence filed by Villeneuve.

In his affidavit sworn June 2, 2017, Villeneuve himself characterized the Liquidation Judgment as providing him with an entitlement to “receive 50% of the proceeds of the liquidation of the partnership assets, plus damages in the amount of $67,691.02 plus interest from 7 March, 2001.” [ 37 ] The Liquidator submits that the characterization of the sum as an award of damages is consistent with the relief sought in the Quebec proceedings where Villeneuve made a distinction between a claim for damages and the liquidation/division of the partnership assets. [ 38 ] Finally, the Liquidator maintains that the creditor and all parties and stakeholders to these proceedings have consistently taken the position that Liquidation Judgment entitled Villeneuve to up to 50% of the proceeds of the liquidated assets plus damages in the sum of $67,691 and interest from 2001.

Neither Villeneuve nor any of the other stakeholders has ever characterized that sum as forming part of Villeneuve share of the liquidated partnership assets. The Liquidator has consistently treated that amount as an award of damages that would be paid from any proceeds remaining after the payment of the Liquidator’s costs and fees and Villeneuve never disputed or challenged this position until the hearing on June 8, 2017. [ 39 ] Counsel for RBC and BMO make similar submissions with respect to Mr. Donovan’s unsworn statements.

In addition, he submits that these constitute inadmissible opinion evidence regarding foreign law and a foreign judgment made without any prior qualification as an expert in foreign law and without any executed acknowledgement of an expert’s duty. [ 40 ] He repeats that the position taken by Villeneuve and Mr. Donovan is inconsistent with the affidavits sworn by Villeneuve. He also refers and relies on the allegations in the relief sought by Mr. Villeneuve in the Quebec proceedings. [ 41 ] Counsel for CRA submits that the comments made by Mr.

Donovan at the conclusion of the hearing must be disregarded as they constitute unsworn opinion, were outside the scope of Mr. Donovan’s affidavit evidence, were not given by a properly qualified expert and were inconsistent with the evidence before the court. Conclusion [ 42 ] While steps were to taken to have the original Quebec judgment modified in order to clarify that the partnership assets included the RBC account, no one sought a further

interpretation of the judgment since all of the parties (including Villeneuve) considered the sum of $67,691 to be damages. They were justified in doing so. The Quebec judgment declared that value of Villeneuve’s share in the partnership equalled 50% of the liquidated assets increased (majoré

e) by the sum of $67, 691. While the judgment makes it clear that Armorer’s share is to bear the costs of the liquidation it does not otherwise direct the Liquidator to effect an unequal distribution of the assets of the liquidation or to pay the $67, 691 and interest from the liquidation. There is a clear finding that Armorer owes that sum to Villeneuve. That amount would be payable to Villeneuve even if the net liquidation of the assets was reduced to $0. Moreover, the judgement has to be interpreted in accordance with the relief sought by Villeneuve. [ 43 ] In his Quebec Declaration, Villeneuve alleged that:

A) Messrs. Armorer and Villeneuve functioned as an undeclared partnership in Quebec for more than 20 years;

B) The amounts claimed in the proceeding from Armorer “represent appropriations by the defendant of partnership funds and damages consequential thereto.” [ 44 ] Villeneuve had demanded that Armorer pay him, “ a sum representing the plaintiff’s share of the sums illegally appropriated by Armourer from the partnership and damages caused to the partnership by such illegal appropriations as well as compensation for the moral damages suffered by Villeneuve.” He sought that Armourer pay to him “the sum of $489,919 and together with interest at the legal rate. [ 45 ] In this proceeding, Villeneuve has delivered two affidavits; on September 29, 2016 and June 2, 2017.

Villeneuve deposed that the March 2014 Quebec judgment “declared that I was entitled to 50% of the proceeds of the liquidation of the partnership assets plus

damages in the amount of $67,691.08.” [46] Mr. Donovan has offered unsworn expert opinion without being qualified as an expert. Villeneuve owes significant fees toMr. Donovan arising out of the Quebec proceedings and Ravinsky, Ryan seeks a charging order on any amount payable to Villeneuve.For this reason, his arguments favouring an unequal division of the partnership assets in favour of his former client, suggest theappearance of a conflict of interest. I can give little weight to his submissions. [47] As such, the amount in issue can only be considered a damages award obtained in a foreign judgment.

The amount awardedwas payable at that time. Nothing prevented Villeneuve from enforcing that judgment. He did not seek to a recognition of his damagesaward in Ontario. Villeneuve does not have any right of priority in this matter for his damages award and he should be treated as anyother judgment creditor with rights in the distribution of Armorer’s share of the remaining proceeds. Liquidator’s Fees and Disbursements, Including Fees and Costsof its Counsel and Necessary Directions [48] The relevant provisions of the Civil Code of Quebec are as follows: 1300.

Unless the administration is gratuitous according to law, the act or the circumstances, the administrator is entitled to theremuneration fixed in the act, by usage or by law, or to the remuneration determined according to the value of the services rendered. A person acting without right or authorization is not entitled to any remuneration. 2134. The remuneration, if any, is determined by the contract, usage or law, or on the basis of the value of the services rendered. 2651.

The following are the prior claims and, notwithstanding any agreement to the contrary, they are in all cases collocated in the orderhere set out: (1) legal costs and all expenses incurred in the common interest; … [49] While this is a liquidation and not a receivership or an insolvency, the case law in those areas provides some useful guidelines.Quebec courts will approve the costs incurred by an administrator that are fair and reasonable in the circumstances. In Autorité desmarchés financiers c. 9095-0049 Québec inc., 2010 QCCS 5804 , a Receiver sought approval of fees and disbursementspursuant to

section 19.5 of the

Loi sur L ‘Autorité des marches financers (LAMF) which contains language that similar to the provisionsof the CcQ. Justice Fraiberg referred to Ontario law and said this at paras. 24 - 26. 24 The standard for the appropriateness of professional fees recognized both in law and in jurisprudence is that they be fair andreasonable. What is fair and reasonable is always contextual, a function of what is being done, who are doing it, how they are doing itand in what circumstances. 25 There have been many iterations of the principle.

A succinct one was repeated by Borins J. of the Ontario Court of Appealin Confectionately Yours Inc. (Re) citing Stratton J. in Belyea v.

Federal Business Development Bank: In considering the factors to be applied when the court uses a quantum meruit basis, Stratton J.A. stated at p. 247: The considerations applicable in determining the reasonable remuneration to be paid to a receiver should, in my opinion, include thenature, extent and value of the assets handled, the complications and difficulties encountered, the degree of assistance provided by thecompany, its officers or its employees, the time spent, the receiver’s knowledge, experience and skill, the diligence and thoroughnessdisplayed, the responsibilities assumed, the results of the receiver’s efforts, and the cost of comparable services when performed in aprudent and economical manner. 26 The worth of services is therefore always relative.

Time spent charged at usual rates, ideally known in advance, is not the entireanswer but it is a good start. [50] He added later at paras. 31 and 62: 31 Receivership mandates under the LAMF are not invitations to an all you can eat buffet for the professionals lucky enough to get them. …

62 The Court believes that absent special circumstances that may justify a receiver applying for directions, he should generally notexpend more on professional services than the lesser of the funds available to him or one half of the expected gain, conservativelyestimated. [51] The Respondents rely on his conclusion at para. 85 to 87: 85 Given the absence of specific direction from the legislator, the foregoing considerations incite the Court to adopt the above-described2:1 ratio as a guideline to apply after the fact in judging the fairness and reasonableness of professional fees charged by the receiverwhen no gain has resulted. 86 As noted above, after approval of his first statement of account, the Receiver had $892,389.20 left to spend in order to reach the nowreduced expected realization of $1,777,770.20.

The expected gain over what was already realized was $885,381. 87 Applying the 2:1 test to the above amounts means that an acceptable level of resources to risk in continuing the receivership was thelesser of $892,389.20 or half the expected gain, $442,690.05. [52] In Confectionately Yours Inc. (Re), (ON CA), the decision cited by Justice Fraiberg, Justice Borinsconcluded at para. 51: 51 I am satisfied that in assessing the compensation of a receiver on a quantum meruit basis the factors suggested by Stratton J.A.in Belyea are a useful guideline.

However, they should not be considered as exhaustive of the factors to be taken into account as otherfactors may be material depending on the circumstances of the receivership. [53] There is no dispute that the Liquidator’s total receipts are $354,676.51. That amount understates the total gross value of thepartnership assets since it only includes the $210,000 that Villeneuve paid to purchase Armorer’s 1/2 interest in the real property at 19Pinhey. The gross value of the partnership assets is $564,676. The Liquidator’s fees and expenses total $225,006.43. [54] Armorer’s share is of the receipts is $282,383.26.

Pursuant to the Quebec Judgment, all fees and costs associated with theliquidation are to be borne by Armorer. [55] Villeneuve’s net share of the RBC account is $71,283.44 Villeneuve has already received $45,000 by way of interimdistribution. [56] If I were to apply the 2:1 test set out by Justice Fraiberg, the Liquidator’s fees and expenses are less than one half of the grossvalue of the partnership assets. If that ratio were applied to the net receivables, the Liquidator’s fees and expenses would be limited to$177, 338.25 and not $118,225.33.

In my view, the Respondents have not properly calculated the 2:1 ratio. [57] What is fair and reasonable is always contextual. Both Ontario and Quebec Courts have concluded that the followingconsiderations are applicable in determining the reasonable remuneration to be paid to a receiver on a quantum meruit basis: The Nature, Extent and Value of the Assets Handled [58] There is no doubt the value of the assets of our modest consist of two items; a bank account and the rental property. Theliquidation of these assets should have been a simple matter.

The Complications and Difficulties Encountered [59] The liquidator has encountered unexpected difficulties at every turn. The dispute between Armorer and Villeneuve hasdragged on for fifteen years. Armorer was represented from time to time, objected to reasonable proposals and delayed matters. RBCinsisted on the clarification of the Quebec judgment so that its account would be clearly identified as the partnership asset. The Quebecjudgment had to be recognized in Ontario. Execution judgments against Armorer were subsequently discovered.

Due to the lapse of timeand the presence of these new creditors, updated appraisals of the property had to be obtained. Nothing in this liquidation was asstraightforward as it should have been. A final example of this is the dispute that arose at the conclusion of the hearing on June 6, 2017when a new issue arose with respect to the meaning of the Quebec judgment and additional submissions were required. The degree of assistance provided by the company, its officers or its employees, the time spent, the receiver’s knowledge, experience andskill, the diligence and thoroughness displayed.

The responsibilities assumed, the results of the receiver’s efforts, and the cost ofcomparable services when performed in a prudent and economical manner

[ 60 ] The reasonableness of the fees incurred by the Liquidator is set out in the affidavits of Ms. Aberback. Her evidence with respect to the market rates charged is not contradicted. In terms of legal fees, counsel have submitted affidavits with respect to their rates in the reasonableness of their fees. For the most part, this evidence is not contradicted. The Respondents have not set out their own rates but simply make bald statements that these are too high. [ 61 ] There are two sets of legal fees that are in issue.

With regard to the fees of Low Murchison, the Liquidator was critical of their services and then retained other counsel. Moreover, it appears that this firm engaged the services of Ravinsky, Ryan to do work without the Liquidator’s knowledge. While the Liquidator may have been able to settle their accounts, I do not allow the Liquidator any amount they paid to Low Murchison.

The Liquidator’s fees are reduced by that sum. [ 62 ] As for the additional Ravinsky, Ryan account delivered for services requested by Low Murchison, the Liquidator is bound by the actions of its agent and I direct the Liquidator to pay the amount claimed, namely $10,431.81. [ 63 ] This results in total fees and expenses of $218, 043.72. While this may be higher than a 2:1 ratio of the net receivables, this sum is less than one half of the value of the gross partnership assets.

I am unwilling to reduce them any further having regard to the disproportionate number of difficulties encountered by the Liquidator in this case. As Justice Fraiberg concluded at para. 82: 82 A fee may therefore be fair and reasonable even when little or nothing is left for the stakeholders if the services were honestly rendered at usual rates in the reasonable expectation of benefit. [ 64 ] This results in a revised amount for distribution of $91,632.89 from which $26,284.44 must be paid to Villeneuve for the balance of his share of the RBC account.

The remaining amount is to be distributed pro rata amongst Armorer’s creditors. Having regard to the irrevocable designation executed by Villeneuve in favour of Ravinsky, Ryan, Villeneuve’s share shall be paid to that firm. [ 65 ] The Liquidator is to be discharged after that distribution. _____________________________ Mr. Justice Robert N. Beaudoin Released: October 19, 2017

SCHEDULE “A” Liquidation of the Partnership of Marcel Villeneuve and Audie Armorer Estimated Realization and Distribution as per Quebec Judgment As at May 18, 2017 Amount to be Retained from A. Armorer's share Indemnity at May 18, 2017 Judgment 67,691.50 Interest 75,791.30 Total indemnity 143,482.80 Total Receipts To Date To Date To Date Building - 19 Pinhey (50% interest sold to M. Villeneuve) Total Villeneuve Armorer at $420,000

Deposit received $ 10,500.00 Balance received at closing 199,500.00 RBC account 143,779.78 Interest 896.73 Total Realisation 354,676.51 Estimated Distribution of Assets & Expenses Paid Building - 19 Pinhey (50% interest) ($420,000) payout to Armorer 210,000.00 - 210,000.00 Funds from RBC account 143,779.78 71,889.89 71,889.89 Interest on funds 896.73 448.37 448.37 354,676.51 72,338.26 282,338.26 Expenses incurred to date (Liquidation costs are to be paid by Armorer): (Expenses include taxes, where applicable) Liquidator fees - paid (46,604.83) - (46,604.83) Liquidator fees - unpaid (48,404.96) (48,404.96) Legal fees - Low Murchison Radnoff - paid (6,962.81) (6,962.81) Legal fees - Ravinsky Ryan Lemoine - paid (17,797.27) - (17,797.27) Legal fees - Ravinsky Ryan Lemoine - unpaid (10,431.81) (10,431.81) Legal fees -Borden Ladner Gervais- paid (15,920.49) (15,920.49) Legal fees -Borden Ladner Gervais- unpaid (75,192.62) (75,192.62) Property appraiser fees (1,582.00) - (1,582.00) Property taxes (2,109.64) (1,054.82) (1,054.82) (225,006.43) (1,054.82) (223,951.61) Sub-total - proceeds/realization 129,670.08 71,283.44 58,386.64 Interim Distribution (45,000.00) (45,000.00) - Total - Before Indemnity 84,670.08 26,283.44 58,386.64 Indemnity - 58,386.64 (58,386.64) Estimated Distribution Based on Court Judgment $ 84,670.08 $ 84,670.08 $ - Notes 1.

MNP was appointed as liquidator on March 4, 2014. 2. As per the Quebec Judgment, all fees and costs associated with the liquidation are to be borne by A. Armorer. 3. There are various stakeholders (BMO, RBC, CRA) who have issued either statement of claims or liens on the property of A. Armorer. CITATION : MNP Ltée. v. Armorer, 2017 ONSC 6268 COURT FILE NO.: 16-68482 DATE: 20171019

ONTARIO SUPERIOR COURT OF JUSTICE BETWEEN: MNP LTÉE Applicant – and – AUDIE ARMORER and MARCEL VILLENEUVE Respondents REASONS FOR decision Beaudoin J. Released: October 19, 2017