In receivership sales, conventional wisdom suggests that once a receiver has accepted an offer subject to court approval, other buyers have missed their chance. The recent Ontario Court of Appeal decision in Cameron Stephens Mortgage Capital Ltd. v. Conacher Kingston Holdings Inc., 2025 ONCA 732, challenges this assumption and offers crucial guidance for transactional lawyers whose clients may be involved in court-supervised sales.
The Facts
TDB Restructuring Limited was appointed as receiver over a series of properties on Islington Avenue (the “Property”) following default on a $15.6 million mortgage. After an eight-month marketing process involving approximately 3,000 potential buyers, the Receiver entered into an Agreement of Purchase and Sale with Arjun Anand in October 2024, subject to court approval.
The deal appeared straightforward: Anand completed his due diligence, waived all conditions, and the only remaining contingency was court approval. The Receiver scheduled a motion for December 4, 2024.
Then came the complications. On December 3, just one day before the scheduled hearing, 1001079582 Ontario Inc. (“100 Inc.”), a wholly owned subsidiary of the property owner AJGL Group Inc., submitted two late offers—6.7% and 14.2% higher than Anand’s offer. After the motion judge adjourned to December 10, 100 Inc. submitted a third offer that was 37% higher than Anand’s accepted offer.
The Motion Judge’s Decision
Justice William Black declined to approve the sale to Anand. While acknowledging that the Receiver’s conduct throughout the process was “unassailable” and that there were no flaws in the sales process, he determined that the 37% differential qualified as “substantially higher” such that approving the original sale risked improvidence.
The motion judge ordered a six-day extension of the bidding process. To address potential unfairness to Anand, he ordered that if Anand did not remain the successful bidder, AJGL would reimburse his reasonable legal costs associated with the process to date.
The Appeal
Anand appealed, arguing the motion judge misapplied the principles from Royal Bank of Canada v. Soundair Corp. (1991), 4 O.R. (3d) 1 (C.A.). He contended that reopening the process required finding both a significantly higher price and that the integrity of the process was compromised.
The Court of Appeal, in reasons by Justice Coroza, dismissed the appeal and upheld the motion judge’s decision.
Key Takeaways for Transactional Lawyers
The Soundair Principles Remain Flexible
The Court of Appeal confirmed that the Soundair principles are not a rigid checklist. When reviewing a receiver’s sale, courts must consider: (1) whether sufficient effort was made to obtain the best price; (2) the interests of all parties; (3) the efficacy and integrity of the process; and (4) whether the working out was unfair.
Critically, no single factor is determinative. The appellant’s argument that a court must find both a substantially higher offer and flaws in the process was rejected. A late offer of sufficient magnitude, standing alone, may warrant reopening the bidding even where the receiver conducted an exemplary marketing process.
“Substantially Higher” Matters
While the decision doesn’t establish a bright-line percentage test, the 37% differential was clearly significant enough to warrant intervention. The Court emphasized that at a certain level, a late-breaking offer “can and perhaps must be considered simply by dint of its value.”
For transactional lawyers, this means that even where your client has completed due diligence and obtained a signed agreement subject only to court approval, the transaction isn’t truly secure until the approval order is granted. Where property values are difficult to determine or market conditions are volatile, the risk of a late competing offer remains real.
Confidentiality Provides Limited Protection
Anand argued that the Receiver improperly disclosed confidential information by including percentage differences in its factum. The Court rejected this argument, noting that: (1) the receivership order explicitly authorized such disclosures; (2) using percentages rather than dollar amounts was a reasonable balance between confidentiality and transparency; and (3) only Anand and 100 Inc. could determine the actual prices from the percentages disclosed.
This holding suggests that receivers have considerable latitude in disclosing information necessary to fulfill their duties to maximize value for creditors. Transactional lawyers should advise clients that confidentiality in court-supervised sales is not absolute.
Practical Risk Management
For buyers in receivership sales, this decision reinforces several practical considerations:
- Timing matters: While court approval is standard in receivership sales, the period between acceptance and approval creates vulnerability to late competing offers.
- Cost protection: The motion judge’s cost order—requiring AJGL to reimburse Anand’s reasonable legal costs if he wasn’t the successful bidder—provided a practical solution to potential unfairness. Sophisticated buyers might negotiate similar protections.
- Price competitiveness: Buyers should ensure their offers are genuinely market-competitive, as courts will prioritize value maximization for creditors over protecting accepted offers.
Conclusion
Cameron Stephens Mortgage Capital confirms that commercial courts retain significant flexibility to respond to fast-moving commercial realities in receivership proceedings. While the decision doesn’t undermine the general principle that properly conducted sales processes should be respected, it establishes that an exceptionally higher late offer may justify reopening bidding even where the process was flawless.
For transactional lawyers, the message is clear: in receivership sales, court approval remains a meaningful hurdle, not a mere formality. Advise your clients accordingly.
