Harry Sherman Crowe: who speaks for the co-op, and who pays for it

The Harry Sherman Crowe Housing Co-operative is a series of townhome blocks and an apartment building at 51 The Chimneystack Road in Toronto, built in 1993 on land "owned by, and leased from, York University," as Justice Penny put it when he appointed a receiver over the co-op on the City of Toronto's application on March 14, 2023, per the Endorsement of Justice Penny, Mar. 14, 2023, p. 2. The co-op wanted a one-year limit on the receivership. He declined to set a hard deadline, "particularly as it seems entirely possible given the scope and duration of the Co-op's problems, that a year will not be sufficient time in which to turn the Co-op around," per the Endorsement of Justice Penny, Mar. 14, 2023, p. 3.

Three and a half years on, the receiver, RSM Canada Limited (now TDB Restructuring Limited), has four ways to end it, and on June 29 Justice Jessica Kimmel authorized it to put them to the members. "This receivership has taken longer than one might have expected," she wrote. "That is not a criticism, just an observation," per the Endorsement of Justice Kimmel, July 2, 2026, paras. 1, 11, 36. The receivership's footing in the Housing Services Act, 2011 was noted here on August 31. Since the June hearing, the filings have centred on a lawyer's bill: a motion filed by Courtney Betty's firm, Betty's Law Office, for $29,986.58 of its fees, and a receiver's report of September 1 asking the court to dismiss it, per the Second Supplement to the Receiver's Fourth Report, Sept. 1, 2026, paras. 3, 40.

The co-op the receiver took over, and the one it reports now

At the appointment, Justice Penny recorded, the co-op was "currently unable to pay its debts as they become due," with gaps in its governance, financial control and rent-geared-to-income administration, per the Endorsement of Justice Penny, Mar. 14, 2023, p. 2. The receiver's statutory notice listed a mortgage held by MCAP Financial Corporation at $8,287,007.04 and $1,076,280.72 owed to other creditors, the largest of them York University at $682,205.32, per the Notice and Statement of Receiver, Mar. 22, 2023, List of Creditors. The co-op houses about 164 households, per the Receiver's Third Report to the Court, Nov. 20, 2025, para. 45.

From March 14, 2023 to March 20, 2026 the receiver took in $12,964,987 and paid out $12,787,610. Under a capital-funding agreement with the City, a roof replacement, new fire alarms, repaving and elevator modernization have been completed, but in January 2026 the City declined three further projects, among them a window replacement estimated at $2,050,000, because the co-op "was recently granted a significant amount of funds under the COCHI program" and other social housing projects "had not received any funding as of late," per the Receiver's Fourth Report to the Court, Mar. 30, 2026, paras. 17, 19–20, 100 and the Receiver's Third Report, Nov. 20, 2025, para. 30.

The co-op's audited statements, as the receiver summarized them in May, show the accumulated deficit falling from $650,000 at June 30, 2022 to $241,000 at June 30, 2025, and a replacement reserve for major capital repairs at $0 in 2022 and 2023 and $161,560 in 2025. The auditor disclaimed an opinion on the 2023 statements, with a note of material uncertainty about the co-op's ability to continue as a going concern, and gave clean opinions for 2024 and 2025. The receiver's reading is that "while the Co-op continues to experience challenges from a financial perspective, primarily as a result of the extensive repairs and maintenance expenditures required, the Co-op has been and continues to improve its financial position," per the Supplement to the Receiver's Fourth Report, May 22, 2026, paras. 8–9. The City pays the receiver and its counsel directly; their fees "are not being paid out of the operating funds of the Co-op," per the Endorsement of Justice Kimmel, July 2, 2026, para. 43.

Four ways out

The receiver understands there has been no meeting of members, and so no election of directors, since its appointment. By-law No. 26 calls for seven directors. When the receiver canvassed members for expressions of interest in serving, it received eight, six of which appeared to meet the minimum qualifications, per the Receiver's Fourth Report, Mar. 30, 2026, paras. 47–48, 52.

The first option, a regular election, would restore a board made up entirely of members, with the receiver calling the meeting and a representative selected by the Co-operative Housing Federation of Toronto in the chair; the information package for members lists among its cons that there "may not be enough eligible Member candidates," per the Order of Justice Kimmel, June 29, 2026, Sched. "A", App. A, p. 8. The second, a "supported board," would seat five independent, non-resident directors beside two member directors, the independents to be replaced by members over time, under a by-law creating a class of non-resident members. According to the receiver, the co-op ran such a board from 2011 to 2016, a structure it says "eventually resulted in governance issues at HSC, ultimately leading to the appointment of the Receiver," per the Receiver's Fourth Report, Mar. 30, 2026, paras. 59–60, 64–65.

The third would transfer the housing project to a non-profit housing corporation, with court and government approvals; members would stay on as tenants, and the co-op "would essentially cease to exist," per the Order of Justice Kimmel, June 29, 2026, Sched. "A", App. A, p. 9. The receiver would run a court-approved sale process, and it notes that the co-op "may have a limited marketability," since its lease from York "expires in January 2037, a period of less than eleven years," and it understands York, which is searching for a new president and vice-chancellor, is unlikely to be in a position to consider a renewal in the near term, per the Receiver's Fourth Report, Mar. 30, 2026, paras. 68, 73, 76.

Last, and by the receiver's account "novel in Ontario," is a land trust. A special-purpose subsidiary of the federation would become York's tenant, preferably under a new lease for a full 21-year term, and sublease the buildings to the co-op for the same term; the trust would carry repairs, finances and reporting to the City, and the co-op would keep its members, an elected board and community life. The receiver reports that the federation and the City are moving another co-operative onto it outside any receivership, after that co-op's members voted for it, per the Receiver's Fourth Report, Mar. 30, 2026, paras. 79–81, 83–84.

June 29: a vote approved, a costs award withheld

The board's responding materials objected to all of the relief the receiver sought and asked for 60 days, extended at the hearing to 120, to come up with a governance structure. At the hearing its counsel, who "now identifies himself as counsel for the respondent HSC, although previously identified in this proceeding as counsel for the Board," told the court there was "very little in dispute," per the Endorsement of Justice Kimmel, July 2, 2026, paras. 7–9, 29.

The order directs the receiver to deliver its information package, hold a Town Hall within 60 days of doing so and a vote within 45 days after that, and limits the Town Hall to members and residents, per the Order of Justice Kimmel, June 29, 2026, paras. 1–3. Members rank a first and second choice, and the votes "are not binding on the Receiver or the Court," per the Order, Sched. "A", pp. 7, 14.

The receiver sought the attendance rule because of an earlier gathering. After the receiver served its motion on March 31, a former board member organized a members' meeting in the co-op's community room, which the receiver declined to attend. It was not disputed, Justice Kimmel wrote, that "unbeknownst to the Receiver, litigation counsel for the Board was invited to, and attended, the Members' Meeting and spoke about, among other things, the receivership, the Receiver's proposed Options and the future governance of the Co-op." She made no determination "at this time about precisely what was, or was not, said." On the Town Hall she wrote: "Mr. Betty (who is counsel for the Board) has had the opportunity to address the Members' Meeting already. He does not need to be given another platform to speak at the Town Hall. The Town Hall is not a debate," per the Endorsement of Justice Kimmel, July 2, 2026, paras. 12–13, 15–17, 19.

She rejected the premise that the receivership must end with board control restored: "Transition back to Board control is an objective or goal, not a requirement to the exclusion of all other Options, as counsel for the Board suggests." No membership application had been processed since the appointment, and at least two residents' applications were "in limbo," per the Endorsement of Justice Kimmel, July 2, 2026, paras. 25, 31. The order authorizes the receiver to decide known pending applications with an advisory committee that counsel to the board "may" propose within 30 days, per the Order of Justice Kimmel, June 29, 2026, paras. 4, 7.

For the first time the receiver asked for costs: $22,889.54 on a substantial indemnity basis, against the board members personally or against the board, in which case, the endorsement records, the money "would ultimately likely come from the Co-op's budget." Justice Kimmel declined. "As the Receiver has noted, the responses typically do follow the pattern of objection up to the hearing, followed by a late concession to some or all of the relief sought, but not without causing added expense and, in some instances, delays," she wrote. But she was "cognizant of the potential implications for the Co-op and its Members, or the individual Board Members. It is not even clear to me at this time who the individuals are who might be facing this sanction. However, I do not foreclose the possibility of an adverse costs award in the future if this pattern continues," per the Endorsement of Justice Kimmel, July 2, 2026, paras. 51, 53–54.

The bill

The motion served on August 4 is brought in the co-op's name as respondent. It asks the court to approve $29,986.58 of fees incurred by counsel for the co-op "and its Board of Directors" on the June 29 motion, payable by the receiver "from the receivership estate, as the Respondent and its Board do not have independent access to funds," per the Notice of Motion (Fee Approval), Aug. 4, 2026, paras. 1–2, 9.

The framework for such requests was set in this receivership in June 2025, when Justice Kimmel applied Peterborough (City) v. Kawartha Native Housing Society Incorporated, 2010 ONCA 705, which, as she set it out, asks among other things whether the board's position had merit, whether the board was acting in the corporation's interest, and whether the position was properly the board's to advance rather than the receiver's. "The court requires evidence of the need for advance funding and what it is for, and will not write a blank cheque," she wrote, per the Endorsement of Justice Kimmel, June 3, 2025, paras. 15, 18, 40. When the invoice for the next motion came to $26,117.29, the court approved payment of the provisional $10,000 cap from the co-op's funds, per the Endorsement of Justice Kimmel, Nov. 28, 2025, paras. 4–5.

In February 2026 Mr. Betty moved for approval of his fees on the December 11, 2025 hearing, and the court set that motion down for April 14, per the Endorsement of Justice Kimmel, Feb. 19, 2026, paras. 1, 4. According to the receiver, that motion was settled in March, and the settlement was paid from the co-op's operating funds. Under the settlement, as the receiver sets it out, the board and its lawyers would seek approval for funding "in advance of incurring fees" and "will not seek approval for, and are not entitled to, funding of any legal work from HSC or the Receiver unless such prior Court authorization has been obtained," the board remaining free to pay for legal services itself, per the Second Supplement to the Receiver's Fourth Report, Sept. 1, 2026, paras. 13, 16–19.

The receiver's September 1 report calls the new motion "in direct contravention of the terms of the Fee Settlement" and notes that no approval was sought before or at the June 29 hearing. It also argues that the services "were inappropriate and should not be sanctioned by this Court," pointing to counsel's part in the members' meeting, and says there is "no basis to believe" that the position Betty's Law advanced had merit or that the board and the firm were acting in the co-op's best interests, per the Second Supplement to the Receiver's Fourth Report, Sept. 1, 2026, paras. 6, 15, 22–23, 31.

The receiver wants the motion dismissed with costs payable by Betty's Law personally, an order it says "will address the Court's concern as to the potential effect on the Co-op, its members or any individual Board member." It would also have the court bar the board and Betty's Law from any further step in the receivership, "including filing of materials or making submissions at any hearing without leave of the Court, to be sought at a case conference in advance." Separately, the report requests that the firm be directed to disclose the identity of its instructing client, "given that counsel has not been consistent, sometimes identifying the client as the Board, while at other times the client is identified as the Co-op itself," per the Second Supplement to the Receiver's Fourth Report, Sept. 1, 2026, paras. 35, 37, 40.

As of September 1, the receiver says, no advisory committee had been proposed. The correspondence it attaches shows a call for committee members going out from Betty's Law on July 28, an exchange over how many seats should go to residents, and a proposal from Mr. Betty on August 3 to extend the deadline for applications to August 10; on August 27 the receiver's counsel wrote that they were "now nearly 30 days past the 30 day timeline ordered by Justice Kimmel," per the Responding Motion Record of the Receiver, Sept. 1, 2026, App. "L". The receiver now asks that the June 29 order be amended so that it can decide the pending membership applications itself, per the Second Supplement to the Receiver's Fourth Report, Sept. 1, 2026, paras. 39–40.

No response from Betty's Law to the receiver's September 1 report is in the record read for this piece. The fee motion is returnable on September 15, 2026, by video conference, per the Notice of Motion (Fee Approval), Aug. 4, 2026. The consultation's clock starts when the information package reaches the members; the receiver's September 1 report does not say whether it has gone out.