Interim approvals of the activities of a receiver

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Courts have long had a supervisory jurisdiction over court-appointed receivers as officers of the court. This supervisory role allows a court, for example, to remove or replace receivers, to fix the remuneration of receivers, and generally to give directions relating to a receiver’s duties. Provincial personal property security statutes have extended this general supervisory power to apply also to receivers privately appointed pursuant to security agreements.  

A practice appears to have developed in which receivers seek court approval of the receiver’s activities on an interim basis, typically by asking the court to provide a generic approval of the activities described in the receiver’s report to the court. An interim court approval of a receiver’s activities is one way for a receiver to attempt to shield itself from liability for its activities in the course of a receivership. The British Columbia Model Receivership Order itself protects receivers from liability, except for gross negligence or wilful misconduct. 

The practice of seeking interim approvals of a receiver’s conduct was recently criticized in Cosa Nova Fashions Ltd. v. The Midas Investment Corporation 2021 ONSC 3989. Mr. Justice Dunphy refused to approve the receiver’s activities as the order is not “necessary or useful” in a receivership and a generic approval of a receiver’s activities is “meaningless” if specific issues are not raised and considered. 

This criticism might discourage the practice of seeking generic interim approvals of a receiver’s activities, and prompt receivers, where necessary, to select specific activities for the court to approve so that the issue can be aired and considered by the court. 

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