



COURT OF APPEAL FOR ONTARIO

CITATION: Montor Business Corporation v. Goldfinger, 2016
    ONCA 407

DATE: 20160530

DOCKET: C57898

Cronk, Pepall and Lauwers JJ.A.

In the Matter of the Bankruptcy
    of Summit Glen Waterloo/2000 Developments Inc., of the City of Toronto, in the
    Province of Ontario

BETWEEN

A.

Farber & Partners
    Inc., the Trustee of the Bankruptcy Estate of

Montor Business
    Corporation, Annopol Holdings Limited and

Summit Glen Brantford
    Holdings Inc.

Applicant (Appellant/

Respondent by way of
    cross-appeal)

and

Morris
    Goldfinger, Goldfinger Jazrawy Diagnostic Services Ltd.,

Summit
    Glen Bridge Street Inc., Mahvash Lechcier-Kimel,

Annopol
    Holdings Limited and Summit Glen Brantford Inc.

Respondents

Patrick Shea and Brent Arnold, for the appellant/respondent
    by way of cross-appeal

Maurice J. Neirinck and Michael McQuade, for the
    respondent/appellant by way of cross-appeal 1830994 Ontario Ltd.

Heard: October 14 and 15, 2015

On appeal from the judgment of Justice David M. Brown of
    the Superior Court of Justice, dated October 28, 2013, with reasons reported at
    2013 ONSC 6635, 8 C.B.R. (6th) 200.

Pepall J.A.:

Introduction

[1]

This is the second of three companion appeals, the other appeals bearing
    file numbers C57879 and C58356. This courts decisions in the three appeals are
    being released contemporaneously. The background to the three appeals is
    described in detail in this courts reasons in C57879.

[2]

On December 1, 2008, Summit Glen Waterloo/2000 Developments Inc. (SG Waterloo)
    was placed in receivership and on June 28, 2010, it was adjudged bankrupt. A.
    Farber & Partners Inc. (Farber) was appointed as Trustee in bankruptcy of
    SG Waterloo. The principal of SG Waterloo was Jack Lechcier-Kimel.

[3]

SG Waterloo owned property located at 105 University Avenue, Waterloo.
    It was sold by Farber on November 22, 2010, and the proceeds were paid into
    court pending the disposition of this litigation.

[4]

1830994 Ontario Ltd. (183), a company incorporated, owned, and
    controlled by Dr. Morris Goldfinger, asserted claims in SG Waterloos
    bankruptcy proceedings. The Trustee objected. 183 and Goldfinger then brought a
    motion seeking to have 183s claims against SG Waterloo valued under s. 135 of
    the
Bankruptcy and Insolvency Act
, R.S.C. 1985, c. B.3, and to require
    that SG Waterloos estate satisfy those claims. The trial judge decided that
    the claims should be addressed in a hybrid trial together with the subject
    matter of Court File Nos. C58356 and C57879.

[5]

In this appeal, Farber appeals from the trial judges allowance of the claims
    made by 183. It appeals in its capacity as Trustee in bankruptcy of Annopol
    Holdings Limited, Montor Business Corporation and Summit Glen Group of
    Companies Inc. Its primary submission is that 183s claims were caught by the
    terms of a full and final release Goldfinger and Kimel signed in 2009.

[6]

For the reasons that follow, I would allow the appeal.

Background

[7]

In 2001, SG Waterloo granted two charges over 105 University Avenue to
    the Community Trust Company (CTC). The first charge secured $50,000 that SG
    Waterloo borrowed from CTC. The second charge, in the amount of $500,000,
    secured guarantees provided by SG Waterloo in support of two promissory notes
    in favour of CTC. Each of these promissory notes was in the amount of $250,000
     one from Goldfinger and one from Kimel. Goldfinger and Kimel also each
    guaranteed the others borrowing from CTC. Most of the money from the CTC
    financing went to SG Waterloo.

[8]

On December 1, 2008, at Goldfingers request, Zeifman & Partners
    Inc. was appointed interim receiver over SG Waterloo and other Kimel companies.
    The appointment order was followed by defaults in payment on the CTC loans by SG
    Waterloo, Goldfinger and Kimel.

[9]

CTC then commenced an action against Goldfinger and Kimel on the
    $250,000 personal loans and a separate action against SG Waterloo. It obtained
    default judgment against SG Waterloo on May 22, 2009 in the amount of $573,506.
    It also obtained default judgment against Kimel, but not against Goldfinger,
    who defended and asserted a counterclaim against CTC. Goldfinger and Kimel also
    cross-claimed against each other.

[10]

CTC commenced its action against SG Waterloo and obtained judgment notwithstanding
    the stay of proceedings imposed by the receivership order and without having
    obtained leave of the court.

[11]

On December 16, 2009, Goldfinger, Kimel, Mahvash (Kimels then-wife) and
    a number of Kimels companies, including SG Waterloo, entered into a settlement
    agreement to settle an action Goldfinger brought after he determined that Kimel
    had breached their First Settlement (discussed in detail in C57879) (the 2009
    Settlement). In the 2009 Settlement, Goldfinger was referred to as the Plaintiff
    and Kimel and his companies, including SG Waterloo, were the Defendants.

[12]

As part of the 2009 Settlement, the parties agreed to enter into a mutual
    release (the Release). Paragraph 14 of the 2009 Settlement stated that:

The parties agree that the aforementioned releases are intended
    to release the Plaintiff and the Defendants from any claims they may have
    between each other arising from Community Trust Companys action against [Kimel]
    and [Goldfinger] (Hamilton Court file #09-8872) and also from any claims
    relating to any possible flow of funds out of the defendant companies.

[13]

Paragraph 20 of the 2009 Settlement provided, in part, that:

Nothing in this agreement or in the release shall restrict the
    Plaintiffs ability to attempt to recover proceeds from sale of properties that
    were the subject of the receivership, to the extent that these proceeds are
    presently held by the Receiver and relate to properties sold prior to the
    execution of these Minutes of Settlement.

[14]

The Release was entitled Full and Final Mutual Release and stated:

IN CONSIDERATION
of the payment to Morris Goldfinger,
    of the sum of $2.00 of lawful money of Canada and for other good and valuable
    consideration, the receipt and sufficiency of which is hereby acknowledged the
    undersigned,

MORRIS GOLDFINGER

On behalf of and including himself, his heirs, administrators,
    executors, assigns,
successors corporations under his control and on behalf
    of any party or parties who claim a right or interest through him
,

(hereinafter referred to as Goldfinger)



and


JACK LECHCIER-KIMEL SUMMIT GLEN TRAYVAN HOLDINGS INC.,
    SUMMIT GLEN WATERLOO/2000 DEVELOPMENTS INC., SUMMIT GLEN BRANTFORD HOLDINGS
    INC., RALEIGH STREET INVESTMENTS INC., SUMMIT GLEN BRIDGE STREET INC., SUMMIT
    GLEN FAIRWAY HOLDINGS INC., ANNOPOL HOLDINGS LTD. and MAHVASH LECHCIER KIMEL

on behalf of and including themselves, their heirs,
    administrators, executors, assigns,
successors, corporations under their
    control (including Summit Glen Group of Companies Inc., Summit Glen Cambridge
    Holdings Inc., Summit Glen (SH) Inc., Summit Glen Woolwich Holdings Inc.,
    Summit Glen Developments Inc. and Bridge Darling Brantford Holdings Inc.), and
    on behalf of any party or parties who claim a right or interest through them

(hereinafter collectively referred to as the Kimel Parties)

SAVE AND EXCEPT AS NOTED BELOW, HEREBY RELEASE, ACQUIT AND
    FOREVER DISCHARGE, EACH OTHER WITHOUT QUALIFICATION OR LIMITATION:

from all manner of actions, causes of action, suits, debts,
    dues, accounts, bonds, covenants, contract, complaints, claims and demands for
    damages, monies, losses, indemnity, costs, interest in loss, or injuries
    howsoever arising which hereto may have been or may hereafter be sustained by
    Goldfinger or the Kimel Parties directly, or indirectly, as a consequence of
    any agreement between the parties and from any and all actions, causes of
    action, claims or demands of whatsoever nature, whether in contract or in tort
    or arising as a result of a fiduciary duty or by virtue of any statute or upon
    or by reason of any damage, loss or injury arising out of the matters set forth
    above and, without limiting the generality of the foregoing, from any and all
    matters that were pleaded in, or could have been pleaded, in Ontario Superior
    Court of Ontario Action 00007823-00CL (herein referred to as the Action).



WITHOUT LIMITING THE GENERALITY OF THE FOREGOING
,
    the parties hereto declare that the intent of this Full and Final Mutual
    Release subject to the specific exclusions set out herein, is to conclude all
    issues arising from the matters set forth above and from the Action and it is
    understood and agreed that this Release is intended to cover, and does cover,
    not only all known injuries, losses and damages, but also injuries, losses and
    damages not now known or anticipated but which may later develop or be
    discovered, including all the effects and consequences thereof.

AND FOR THE SAID CONSIDERATION
it is agreed and understood that Goldfinger and the
    Kimel Parties will not make any claim or take any proceedings against any other
    person or corporation who might claim, in any manner or forum, contribution or
    indemnity in common law or in equity, or under the provisions of any statute or
    regulation  from each of Goldfinger and The Kimel Parties discharged by this
    Full and Final Mutual Release, in connection with the matters outlined above
    and in the Action.   IT IS AGREED AND UNDERSTOOD that if either Goldfinger and
    the Kimel Parties commences such an action, or takes such proceedings, and
    Goldfinger and the Kimel Parties (or any of them) are added to such proceeding
    in any manner whatsoever, whether justified in law or not, Goldfinger and the
    Kimel Parties will immediately discontinue the proceedings and/or claims, and
    Goldfinger and the Kimel Parties will be liable to each of them for the legal
    costs incurred in any such proceeding, on a solicitor and his own client scale.
    This Full and Final Release shall operate conclusively as an estoppel in the
    event of any claim, action, complaint or proceeding which might be brought in
    the future by Goldfinger or the Kimel Parties with respect to the matters
    covered by this Full and Final Mutual Release. This Full and Final Mutual
    Release may be pleaded in the event any such claim, action, complaint or
    proceeding is brought, as a complete defence and reply, and may be relied upon
    in any proceeding to dismiss the claim, action, complaint or proceeding on a
    summary basis and no objection will be raised by Goldfinger and the Kimel
    Parties in any subsequent action that the other parties in the subsequent
    action were not privy to formation of this Release.
[Underlining
    added; all caps and bold in original.]
[1]

[15]

After entering into the 2009 Settlement, Goldfinger negotiated a
    settlement of CTCs action against him. On July 27, 2010, Goldfinger
    incorporated 183. The invoice to Goldfinger from his lawyer refers to 183 as a
    nominee company.

[16]

On August 4, 2010, CTC assigned its two charges on SG Waterloos
    property and the default judgment to 183 for valuable consideration. While
    Farber disputes the precise amount Goldfinger claims to have paid CTC, nothing
    turns on the difference for the purposes of my analysis.

[17]

In summary, Goldfinger incorporated 183 and had 183 purchase the
    assignments from CTC. As a result, 183 became a creditor of Goldfinger, and of
    SG Waterloo and Kimel as well. As Farber put it, at para. 26 of its factum:

It is unusual to have a debtor who is financially able to pay
    his debts (Goldfinger): (a) incorporate a nominee company (183); (b) pay the
    amount owing to the creditor (CTC) to have that nominee company take an
    assignment of a guarantee rather than pay the debt; and (c) cause the nominee
    company to pursue a surety (SG [Waterloo]) to recover under a guarantee.

[18]

Subsequent to the assignment of the charges to 183, SG Waterloo was
    adjudged bankrupt. 183 filed a proof of claim in SG Waterloos bankruptcy. It
    was dated September 17, 2010 and claimed $765,792.38, which reflected the two
    charges.

Trial Judges Decision

[19]

The trial judge allowed 183s claim, as assignee, for the principal
    amount of CTCs $50,000 charge, together with interest until the date of
    payment, along with $450 representing NSF and charge renewal fees. He allowed
    183s claim in respect of CTCs $500,000 charge with interest until the date of
    payment.

[20]

In reaching his conclusion on the $50,000 and $500,000 principal claims,
    the trial judge rejected Farbers submission that the Release applied to bar
    183s claims as assignee. He gave four reasons. First, the trial judge held
    that, while the Release included in its definition of Goldfinger any
    successors [
sic
] corporations under his control, that term, when read
    in the context of the entire definition, referred to any successor corporation
    that claimed a right or interest
through him
 in respect of the matters
    released (trial judges emphasis). He held that 183 took assignments of the CTC
    charges in its own right and was not claiming a right or interest through
    Goldfinger. Second, the assignments were made well after Goldfinger and the
    Kimel Parties had entered into the Release. Third, they were made for valuable
    consideration given at the time of the assignments. Finally, the assignment of
    the charges was not captured by the matters released. The Release described
    these as matters:

[W]hich hereto may have been or may hereafter be sustained by
    Goldfinger or the Kimel Parties directly, or indirectly, as a consequence of
    any agreement between the parties and from any and all actions, causes of
    action, claims or demands of whatsoever nature, whether in contract or in tort
    or arising as a result of a fiduciary duty or by virtue of any statute.

Farbers Appeal

[21]

Farber appeals from this decision. It advances numerous grounds of
    appeal, the first of which is that the trial judge erred in concluding that the
    Release did not extinguish 183s claims. Farber acknowledges that if this court
    finds in its favour on this ground of appeal, there is no need to address the
    remaining grounds. I agree and given my conclusion, I will simply address the
    issue of the Release.

Parties Positions

(a)

Farber

[22]

Farber argues that the trial judge did not give effect to the purpose of
    the Release, which was to end all disputes relating to the sale proceeds from 105
    University Avenue and to CTCs action. The definition of Goldfinger in the Release
    should have been interpreted so as to bar claims by any corporations under
    Goldfingers control, including 183. It spoke of Goldfinger as including successors
    corporations under his control and on behalf of any party or parties who claim
    a right or interest through him. Farber submits that the trial judge should
    have read a comma into this definition between the words successors and
    corporations; instead, he read out the s in successor.

[23]

Farber goes on to argue that even if the Release did not apply to 183,
    the trial judge should have looked through 183 to Goldfinger. 183 was
    incorporated only to get around the Release, an improper purpose that justifies
    ignoring its separate identity.

[24]

In addition, Farber submits that the Release applies to subsequent
    claims and the trial judge improperly narrowed the scope of the Release. When
    properly interpreted, 183s claims fall squarely within the terms of the Release.
    The fact that 183 paid value for the assignment was irrelevant.

(b)

183

[25]

183 responds by submitting that it was not a party to the Release and
    was not even incorporated when the Release was entered into. The Release was
    restricted to certain matters that did not extend to 183 or to the secured
    claims of 183 based on the assignments from CTC.

Analysis

[26]

The first issue to consider is the applicable standard of review. The
    Supreme Court has held that contractual interpretation involves questions of
    mixed fact and law, and as such, should be reviewed for palpable and overriding
    error:
Sattva Capital Corp. v. Creston Moly Corp.
, 2014 SCC 53, [2014] 2
    S.C.R. 633, at para. 50;
Heritage Capital Corp. v. Equitable Trust Co.
,
    2016 SCC 19, 2016 S.C.J. No. 19, at para. 21.

[27]

However, the Supreme Court recognized that it may be possible to
    identify an extricable question of law, which would be reviewed on a
    correctness standard:
Sattva
, at para. 53.

The Court went on to
    state that appellate courts should be cautious about identifying extricable
    questions of law when engaged in a review of contractual interpretation.

[28]

Extricable questions of law include legal errors involving the
    application of an incorrect principle, the failure to consider a required
    element of a legal test, or the failure to consider a relevant factor:
Sattva
,
    at para. 53.

[29]

Here, the language and wording of the Release had to be reviewed,
    construed, and assigned meaning. The Release had to be considered as a whole:
Deslaurier
    Custom Cabinets Inc. v. 1728106 Ontario Inc.
, 2016 ONCA 246, [2016] O.J.
    No. 1705, at paras. 31, 54 and 59. Such an exercise or review is not evident from
    the reasons advanced by the trial judge for rejecting Farbers position. This was
    in error. When considered as a whole, the Release applies to companies
    controlled by Goldfinger, including 183, and to the subject matter of 183s
    claims.

[30]

The Release defined the releasor, Goldfinger, as: [O]n behalf of and
    including himself, his heirs, administrators, executors, assigns,
successors corporations under his control
and
on
    behalf of any party or parties who claim a right or interest through him (emphasis
    added).

[31]

The Release went on to define Kimel, his companies and wife. The
    definition of those parties stated: [O]n behalf of and including themselves,
    their heirs, administrators, executors, assigns,
successors,
    corporations under their control (including), and
on behalf of any party or parties who claim a
    right or interest through them
 (emphasis added). The only
    material differences between these definitions is that there is no comma
    separating the words successors and corporations in the Goldfinger
    definition and no comma preceding the words and on behalf of any party or
    parties who claim a right or interest; there are commas between these words in
    the Kimel definition. Arguably, this was no more than a drafting error.

[32]

The trial judge had to give effect to all of the words of the Release,
    which he did not do. If one considers all of the words of the Release, certain
    conclusions are manifest:

(i)    The definition of Goldfinger
    is ambiguous.

(ii)   The definition
    of Kimel Parties in the Release provides a guide to interpretation of the
    definition of Goldfinger, and makes both grammatical and commercial sense.

(iii)   Read
    as a whole, it is an error to read out the s in the word successors and to
    exclude commas after the words successors and control.

(iv)   The definition
    of Goldfinger is not limited to successor corporations who claim a right or
    interest through Goldfinger.

(v)   The
    construction of the definition, in the context of the Release read as a whole, should
    state: successors
,
corporations under his control
, and
on behalf
    of any party or parties who claim a right or interest through him (emphasis
    added).

[33]

183 concedes that it is a company under Goldfingers control. When
    properly construed, 183 was captured by the definition of the parties
    encompassed by the Release.

[34]

This result also makes practical and commercial sense. It would be bizarre
    if a person could circumvent the ambit of a release simply by establishing a
    nominee company in his or her stead. It is also consistent with the purpose
    underlying the 2009 Settlement, which was to bring an end to the underlying
    litigation and the relationship between Goldfinger and Kimel.

[35]

It is noteworthy, by way of comparison, that paragraph 21 of the 2009
    Settlement expressly states that nothing prevents Goldfinger from pursuing his
    dispute with another third party, HSBC. In contrast, the 2009 Settlement does
    not specifically exclude the CTC dispute.

[36]

Second, turning to the subject matter of the Release, the parties to the
    2009 Settlement (and such parties should be read to include 183) gave up their
    claims to proceeds generated by SG Waterloo.

[37]

Again, to repeat, paragraph 14 of the 2009 Settlement stated:

The parties agree that the aforementioned releases are intended
    to release the Plaintiff and the Defendants from any claims they may have
    between each other arising from Community Trust Companys action against Jack
    Lechcier-Kimel and Morris Goldfinger (Hamilton Court file #09-8872) and also
    from any claims relating to any possible flow of funds out of the defendant
    companies.

[38]

In addition, paragraph 17 provided:

The Plaintiff will refrain from providing cooperation to any
    creditor or potential creditor of the defendants, directly or indirectly with
    respect to any proceedings against the defendants, except to the extent
    required by law.

[39]

As mentioned, the Plaintiff is defined as Goldfinger and the Defendants
    include SG Waterloo.

[40]

Furthermore, paragraph 20, quoted above, expressly permitted Goldfinger
    to attempt to recover proceeds from the sale of properties sold prior to the
    execution of the 2009 Settlement. As I have said, 105 University was sold on
    November 22, 2010, eleven months after the date of the 2009 Settlement.

[41]

Goldfinger described the 2009 Settlement as being comprehensive and he
    entered it to minimize significant legal costs and losses. He stated he made a
    compromise as he was entitled to no further repayment of the debt that was owed
    to him. He also stated that he had lost his desire to litigate as a result of
    his family circumstances.

[42]

These surrounding circumstances lend support to the conclusion that the
    2009 Settlement, including the mutual Release, was designed to result in
    finality and to release any future claim Goldfinger, and by extension 183, had
    against SG Waterloo. In return, Goldfinger accepted $5 million that was secured
    against property located on Park Lane in Toronto and owned by Kimels wife.
[2]

[43]

The Release was drafted in the broadest of language and applies to:

[A]ll manner of actions, causes of action, suits, debts, dues,
    accounts, bonds, covenants, contract, complaints, claims and demands for
    damages, monies, losses, indemnity, costs, interest in loss or injuries
    howsoever arising which hereto may have been or may hereafter be sustained by
    Goldfinger or the Kimel Parties directly, or indirectly, as a consequence of
    any agreement between the parties and from any and all actions, causes of
    action, claims or demands of whatsoever nature, whether in contract or in tort
    or arising as a result of a fiduciary duty or by virtue of any statute or upon
    or by reason of any damage, loss or injury arising out of the matters set forth
    above and, without limiting the generality of the foregoing, from any and all
    matters that were pleaded in, or could have been pleaded, in Ontario Superior
    Court of Ontario Action 00007823-00CL (herein referred to as the Action).

[44]

The matters set forth above could only refer to the broad language
    which preceded that statement.

[45]

In addition, later the Release stated:

WITHOUT LIMITING THE GENERALITY OF THE FOREGOING
,
    the parties hereto declare that the intent of this Full and Final Mutual
    Release subject to the specific exclusions set out herein, is to conclude all
    issues arising from the matters set forth above and from the Action and it is
    understood and agreed that this Release is intended to cover, and does cover,
    not only all known injuries, losses and damages, but also injuries, losses and
    damages not now known or anticipated but which may later develop or be discovered,
    including all the effects and consequences thereof.

[46]

It also provided that Goldfinger and the Kimel Parties would not make
    any claim or take any proceedings against another person or corporation who
    might claim against either of them.

[47]

In summary, the Release included 183, and SG Waterloo was a beneficiary
    of the Release. Under the 2009 Settlement, Goldfinger had both released SG Waterloo
    and given up any claim to the proceeds from the sale of 105 University Avenue. It
    is not now open to him, through the guise of 183, to circumvent those
    commitments. The fact that he paid CTC in part to avoid personal liability
    should not now enable him to recoup that amount from a source he covenanted to
    release.

[48]

In my view, the trial judge erred in not considering the entire contract
    when interpreting its proper meaning and scope. Had he done so, he would have
    reached a different conclusion.

[49]

In light of this determination, there is no need to consider the
    remaining grounds of appeal.

Disposition

[50]

For these reasons, the appeal is allowed and the October 28, 2013 judgment
    is varied to delete paragraphs 8 and 9, and to substitute the following:

8. THIS COURT ORDERS
that the secured claim of 1830994
    Ontario Limited (183 Ontario) against SGW in respect of the Community Trust
    Company (CTC) $50,000.00 Charge is disallowed.

9. THIS COURT ORDERS
that the secured claim of 183
    Ontario against SGW in respect of the CTC $500,000.00 Charge is disallowed.

[51]

As agreed by the parties, I would order 183 to pay Farber $25,000 for
    the costs of this appeal, inclusive of disbursements and HST.

Released:

MAY 30 2016                                              S.E.
    Pepall J.A.

EAC                                                                      I
    agree E.A. Cronk J.A.

I
    agree P. Lauwers J.A.





[1]
The Release contained apparent typographical errors which have not been
    corrected in these reasons.



[2]
Kimel and his wife, Mahvash, separated in January 2009 and divorced in November
    2010. Mahvash married Goldfinger shortly thereafter, on November 18, 2010.


