Cacoeli: the OSC's receivership test survives, and Centreville is sold

In September 2021 Cacoeli bought 60 Centreville Street, an apartment complex in Kitchener, for $9,250,000. The day before, according to the Ontario Securities Commission's evidence as Justice Jana Steele summarized it, approximately $6.5 million was wired from the bank account of a different partnership, Cacoeli Linnwood-Lowther LP, to Cacoeli's lawyers. The respondents acknowledged that $3.551 million of Linnwood-Lowther money went into the purchase, and said that partnership's investors received a corresponding interest in the Centreville partnership, per the Reasons for Decision, 2025 ONSC 3012, May 23, 2025, paras. 16(c), 50 and the transfer listed in the Approval and Vesting Order (Centreville), June 17, 2026, Sched. "D". Linnwood-Lowther was one of four Cacoeli projects the Commission's investigation focused on, and that investigation, opened after a complaint from a former chief financial officer, was still going on when the Court of Appeal ruled (2025 ONCA 654, Sept. 23, 2025, para. 4).

At 1:40 p.m. on August 19, 2026, Grant Thornton Limited, receiver and manager of the Cacoeli group, delivered the certificate completing the sale of Centreville to Teperium Capital Limited, per the Receiver's Certificate (Centreville), Aug. 19, 2026, p. 3. Eight days later the Supreme Court of Canada dismissed, with costs, the Cacoeli entities' application for leave to appeal from 2025 ONCA 654, in a two-page judgment that gives no reasons (Judgment, Supreme Court of Canada No. 42110, Aug. 27, 2026, pp. 1–2). That leaves in place the Court of Appeal's holding that the Commission need show only a serious concern that there have been possible breaches of the Securities Act, not a strong prima facie case, for a court to appoint a receiver under s. 129 while an investigation continues (2025 ONCA 654, paras. 7, 11, 14).

The standard, as it was argued

Cacoeli raised at least $13 million from about 53 investors from 2015 onward to help buy and redevelop residential property in southern Ontario, usually large multi-unit rental buildings, each project in its own limited partnership with a Cacoeli corporation as general partner (Reasons, paras. 6–8). The Commission's application, by the respondents' account, alleged five instances of fraud contrary to s. 126.1 of the Securities Act (Application for Leave to Appeal, Nov. 21, 2025, Memorandum of Argument, para. 16). Justice Steele heard the application on April 22 and 29, 2025; Grant Thornton had been monitor since February 14 (Reasons, p. 1 and para. 19).

The respondents asked her to require a strong prima facie case, because from their side the order was "akin to a final order." She declined: "I see no reason to elevate the standard to strong prima facie case for applications under section 129 of the Securities Act. These applications are often brought while investigations are ongoing, and the Commission seeks to take protective steps in the interim." The Commission's comparison, which she set out, was the serious-issue-to-be-tried standard the Court of Appeal had accepted for continuing freeze directions under s. 126 in Qin v. Ontario Securities Commission, 2021 ONCA 165 (Reasons, paras. 32–36).

The respondents admitted that equity had moved between projects, but said the limited partnership agreements allowed it and that investors in the contributing partnership had received, or were meant to receive, an interest in the project the money went to (2025 ONCA 654, para. 6). On Cacoeli Heiman LP, Justice Steele accepted that investors had received such an interest and had been told, "albeit after the transaction was effected." Reading the agreements as a whole, though, with each partnership's purpose confined to one defined Property and each brochure describing a "single purpose limited partnership," she concluded that moving funds from one partnership to another "was not permitted" and that there were serious concerns warranting an order (Reasons, paras. 49, 61, 64, 68–71). She refused to carve out 4577 Steeles Avenue East in Toronto for its first mortgagee, Clifton Blake Capital Corp., agreeing with CMLS Financial Ltd., Centreville's first mortgagee, that exemptions would mean a "free for all" among mortgagees (Reasons, paras. 72, 74). Her order of June 5, 2025 covers every respondent (Receivership Order, June 5, 2025, para. 8).

Two trips to the Court of Appeal

The respondents first sought a stay. Refusing it on June 23, 2025, Justice Gomery recited the monitor's reports: related-party payments made without notice to the monitor had reached $61,000, or 21.7% of receipts over 60 days, by early April, while mortgages were unpaid or underpaid, and more than 27% of rental receipts between April 14 and June 9; and by the principals' own description of an account they controlled, almost $123,000 of just over $187,000 deposited had gone out as "personal" payments to them. The principals had told the monitor they opened that account to lend to the business after the Canada Revenue Agency garnished a Cacoeli company's accounts, and had denied commingling (Endorsement (Gomery J.A.), 2025 ONCA 465, June 23, 2025, paras. 7, 13). The motions judge found that a stay would harm the public interest, and noted that the order did not let the receiver sell outside the ordinary course without court approval. "This is unusual," the endorsement says (2025 ONCA 465, paras. 25, 42).

A panel of Justices Hourigan, Zarnett and Pomerance dismissed the appeal on September 23, 2025. Because s. 129(8) lets the court vary or discharge the order on motion, the court reasoned, "while an order appointing a receiver is final for the purposes of determining the correct appeal route, it is not final in the sense of being a final adjudication on the merits of the request for a receiver" (2025 ONCA 654, para. 10). The court held that the serious concern standard fits the purpose of s. 129, and that "To impose an onerous evidentiary standard for a receivership would impede the public protection mandate of the OSC, as it could potentially make it impossible for the OSC to obtain a receivership at the early stages of an investigation when the facts are not fully known" (para. 11). It rejected the argument that the lower "reasonable and expedient" test the legislature wrote into s. 126(5.1) for freezes implied a higher one for receivers, found it unnecessary to test the evidence against the stricter standard, and fixed costs at $15,000 (2025 ONCA 654, paras. 12–15).

The question put to the Supreme Court

The leave application of November 21, 2025 asked what standard of proof applies when a provincial securities regulator seeks a receiver on alleged violations of securities law, and whether different civil standards of proof may apply at hearings for final relief. The same receivership ground, it said, appears in the securities statutes of Nova Scotia, New Brunswick, Prince Edward Island, Newfoundland and Labrador, Yukon, the Northwest Territories and Nunavut (Memorandum of Argument, paras. 36, 39). A serious concern standard "requires only that the Commission raise a non-frivolous allegation," the applicants wrote; citing the single civil standard of F.H. v. McDougall, 2008 SCC 53, they said a receiver had been appointed over nineteen companies "in circumstances where the alleged 'issues' will never be tried," and they pointed to the receiver's pending sale-process motion as evidence that the consequences were irreversible (Memorandum of Argument, paras. 47, 62, 70–71). They added that the Commission had interviewed fourteen people but not the principals, and abandoned one of its five fraud allegations at the hearing, concerning Cacoeli Arlington Rental LP, whose investors had been paid in full in October 2024 (Memorandum of Argument, paras. 17, 21).