LabTest Certification: a receiver over four companies, judgment against six

LabTest Certification tests and certifies other companies' products so that they can lawfully be sold. It provides "product safety testing, inspection, and certification services to customers who manufacture and sell medical, electrical, chemical, and other products that are required to comply with Canadian and international regulations and standards to be eligible for sale or use," per the Petition, Jul. 16, 2026, para. 3. Its head office is in Delta, British Columbia, with the operating business carried on there and at Oakville, Ontario; the signature block on its chief executive's correspondence in the record adds Richmond, Las Vegas and Dallas to the letterhead, per the Affidavit #3 of Jennifer Alambre, Sept. 10, 2026, Ex. "F". On September 15, 2026, in the Supreme Court of British Columbia at Vancouver, No. S-265325, Justice G.C. Weatherill appointed Deloitte Restructuring Inc. receiver of four of the companies in the group and entered judgment against six respondents, each in the amount of $17,621,821.65, per the Receivership Order, Sept. 15, 2026, paras. 1, 36.

Four companies are subject to the appointment and two are not. Labtest Certification Inc. and Labtest Certification Ontario Inc. carry on the testing business; Goshu Products/Services Inc. owns three strata units on 92 Street in Delta and one on Westminster Highway in Richmond; 2842878 Ontario Inc. owns the two Bristol Circle units in Oakville, one of which is rented to a third party. Kavinder Singh Dhillon is the sole director and officer of all five of the companies in the group and their Chairman, President and CEO; he is a respondent and a guarantor, as is the fifth company, MuAnalysis Inc. of Ottawa, which granted security but whose assets the receiver was not appointed over, per the Petition, Jul. 16, 2026, p. 1 and paras. 12–17 and the Affidavit #1 of Kavinder Singh Dhillon, Aug. 31, 2026, paras. 3–4, 8.

What the bank lent, and against what

The facilities date from 2024. The May 2024 loans were made by Canadian Western Bank, which later amalgamated with National Bank of Canada; the July 2024 loan to 284 Ontario was made by the bank itself. Labtest took a $500,000 demand operating loan and a $100,000 business credit card, later adding a US$10,000 card; Labtest Ontario took a $100,000 demand operating loan and a $50,000 card. The two real estate companies took the larger loans: a $7,500,000 demand collateral mortgage loan to Goshu, for paying out financing and amounts owed to the Canada Revenue Agency, and a $9,800,000 demand collateral mortgage loan to 284 Ontario, for paying out financing and buying out other shareholders, per the Petition, Jul. 16, 2026, paras. 6, 21–22 and the Response to Petition, Aug. 31, 2026, paras. 5–6.

Behind the loans sits a security package the order later declared valid and first-ranking, parcel by parcel and registration by registration: a collateral mortgage and assignment of rents over the British Columbia lands in the amount of $9,015,000, a mortgage and assignment of rents over the Oakville lands in the amount of $12,000,000, general security agreements from each of the five companies, and assignment and postponement agreements subordinating what the companies and Mr. Dhillon are owed by one another. A cross-default agreement dated July 31, 2024 ties the loan agreements together, so that a default under one is a default under the others, per the Petition, Jul. 16, 2026, paras. 8, 24, 27–29. Every one of the loans is payable on demand "irrespective of any breaches or defaults," per the Petition, Jul. 16, 2026, para. 23.

The bank's account of the year

The bank's evidence, sworn by its Senior Director, Special Loans, begins in September 2025, when it wrote to the four borrowers about breaches of reporting requirements, financial covenants and other conditions, and agreed to waive some of them for the time being. The defaults pleaded include a failure, for the year ended December 31, 2024, to maintain EBITDA of at least 1.30 times principal and interest paid or accrued on all debt, measured across Labtest, Labtest Ontario, MuAnalysis and Goshu combined, and a failure to deliver the 2025 financial statements and projections within 120 days of year end, per the Affidavit #1 of Raymond Pai, Jul. 16, 2026, paras. 37–38.

The petition pleads monthly payment defaults on the Goshu mortgage loan in November and December 2025 and January 2026, and again at the end of April, May and June 2026, per the Petition, Jul. 16, 2026, paras. 34–35. In February 2026 the bank says it discovered that income tax, GST and HST, payroll source deductions and property taxes had gone unpaid; in May, that a CRA payroll audit had turned up arrears of approximately $700,000 in British Columbia and $240,000 in Ontario; and in June, that $419,228 had been withdrawn from the companies' accounts in the year ended December 31, 2024 and advanced to Mr. Dhillon and to third parties indirectly affiliated with the companies, without the bank's approval, per the Affidavit #1 of Raymond Pai, Jul. 16, 2026, paras. 40, 52, 63. It also says it learned in May 2026 that the group's primary bank accounts were not held with it at all, but at Royal Bank of Canada and Wells Fargo, per the Affidavit #1 of Raymond Pai, Jul. 16, 2026, para. 47.

Deloitte was engaged as the bank's financial advisor on April 13, 2026, with the companies' consent and at their expense. Much of the bank's case from that point is a count of documents: an information request cut down to 32 items on April 23; none delivered by April 28; 10 delivered on April 30, of which five were returned as insufficiently completed; 13 more on May 14, of which seven were returned for lack of detail; 21 items still outstanding on May 25, and 20 on June 2. Weekly Thursday update calls were agreed on May 6; Mr. Dhillon missed the first on May 14, asked to cancel the June 18 call in order to watch a soccer game, attended the June 25 call only briefly, and did not attend on July 2 or July 9, per the Affidavit #1 of Raymond Pai, Jul. 16, 2026, paras. 42–46, 51, 54, 59, 65, 67. Testing by Deloitte, as relayed in the affidavit, found that none of the sampled bank transactions could be tied to journal entries, and that after a January 1, 2026 migration to a new accounting system the 2025 balance sheet details had been omitted, leaving balances to be reconstructed by hand, per the Affidavit #1 of Raymond Pai, Jul. 16, 2026, para. 74.

Counsel demanded payment of everything outstanding on June 2, 2026, with a notice of intention to enforce security under s. 244 of the BIA, giving until June 23. The respondents put the demanded figure at $17,792,687.55 as at June 1, 2026, per the Response to Petition, Aug. 31, 2026, para. 23. Nothing was repaid by the deadline, and the petition was filed on July 16, with the indebtedness stated as $17,621,821.65 as at June 26, 2026 — $9,609,906.61 on the 284 Ontario loan at 6.15%, $7,285,510.72 on the Goshu loan at 6.43%, $591,158.96 on the Labtest operating loan and cards and $135,245.36 on Labtest Ontario's. By that date, the bank's evidence says, the loans "had all been nearly maxed out," per the Affidavit #1 of Raymond Pai, Jul. 16, 2026, para. 77 and Ex. "A".

The answer

The respondents opposed every paragraph of the relief sought, and their account of the same year runs differently. The three winter payments were missed, they say, "[d]ue to the omission, neglect, and/or mismanagement of funds by the Chief Financial Officer" of Labtest, whose employment was terminated around January 8, 2026 once the omissions came to light, per the Response to Petition, Aug. 31, 2026, paras. 9, 11. Mr. Dhillon deposes that in February 2026 he agreed with the bank to pay an extra $25,000 a month until the arrears were cleared, and understood the bank to have agreed; that on March 30 the bank took the monthly payment of $50,337.44 together with a further $24,662.56 that he understood to be that arrangement working; and that in April or May the bank stopped withdrawing the monthly payments altogether, per the Affidavit #1 of Kavinder Singh Dhillon, Aug. 31, 2026, paras. 16, 20, 27. On June 29, 2026 the bank withdrew $227,024.64 from the Goshu account against the arrears, per the Affidavit #1 of Kavinder Singh Dhillon, Aug. 31, 2026, para. 29. The bank's position, taken in a letter of June 2, is that no repayment agreement was ever made and that Goshu's chequing account had repeatedly lacked the funds for its automatic withdrawals, per the Affidavit #1 of Raymond Pai, Jul. 16, 2026, para. 55.