Can*Sport Incorporated v. HarbourEdge Mortgage Investment Corporation, 2022 NSCA 8

February 02, 2022

What level of detail is required in reasons for granting a receivership order?

The Respondent, HarbourEdge, was a commercial lender. In 2014, it extended funding to Can*Sport for the construction of a development in Bedford, Nova Scotia. Can*Sport’s obligations were personally guaranteed by the Applicant Lee Adamski. The lending relationship soured and litigation ensued.

HarbourEdge sought to have a receiver appointed under the BIA. It argued the lack of financial transparency regarding Can*Sport’s revenue and expenses was detrimental to its security interest in the property. The motion judge granted the motion, finding that the fact that HarbourEdge held first priority security over the property and the credit facilities provided for the appointment of a receiver supported the appointment of the receiver.

The Applicants sought leave to appeal. They asserted that the motion judge erred by, among other things, failing to provide sufficient reasons to permit appellate review. The Applicants argued that the motion judge’s reasons were so deficient that it was unclear how or why he concluded that the appointment of a receiver was “just and convenient” in the circumstances. They submitted that the motion judge was obligated to set out a “full analysis” of every factor he said he considered.

A trial judge’s reasons fulfill five basic purposes: 1) to inform the parties why the decision was made; 2) to provide public accountability for the judicial decision; 3) to permit effective appellate review; 4) to help ensure fair and accurate decision making, and 5) to provide guidance to future courts in accordance with the principle of stare decisis. These basic goals are effectively fulfilled if the decision informs the reader as to what was decided and why. The degree of detail required to meet these basic functions may vary with the circumstances. The object is not to show how the judge arrived at his or her conclusion, in a “watch me think” fashion. It is rather to show why the judge made that decision.

On appeal, the role of the appellate court is not to criticize the level of detail or expression. Instead, it is to determine if the functions noted above have been fulfilled to the point where a meaningful appeal is available. To justify appellate intervention, the reasons, read in the context of the evidentiary record and the live issues on which the trial focused, must fail to disclose an intelligible basis for the verdict, capable of permitting meaningful appellate review.

Here, the Court of Appeal held that the motion judge was not required to perform an exacting analysis of each factor upon which he relied. All that was required was for his reasons, read in context of the evidence and submissions before him, to adequately explain why he made the determination he did. The Court concluded that the motion judge’s reasons explained what law he applied, what the factual context was and the factors that led to his conclusion that the appointment of a receiver was appropriate. The Applicants did not present any legally sound argument that the motion judge’s reasons would likely warrant appellate intervention. They failed to establish that the appeal was prima facie meritorious.

Accordingly, the Court dismissed the application for leave.

Judge: Bourgeois J.A.

Counsel: Christopher I. Robinson of CIR Law for the applicants; Robert G. MacKeigan, Q.C. and Sara L. Scott of Stewart McKelvey for the respondent; Stephen Kingston and Colin Boyd of McInnes Cooper for the receiver, MNP Ltd.

By Matilda Lici