Page: 56
[114] Since I have accepted the Receiver’s allocations and specifically the repayments
to the Lenders have been allocated equally to NIP and NPL, I agree that neither NIP nor
NPL can seek contribution from the other under the Act. On the other hand, NPL and
NIP could seek one-fifth contribution from each of the other Guarantors to the extent of
those respective overpayments. As well, NPL and NIP are entitled to indemnity from
each of the Borrowers.
[115] I accept the evidence of the Receiver that the Borrowers and Co-Guarantors are
insolvent and as a result there is no subrogated rights or right of contribution or
indemnity to enforce.
[116] In the motion brief of the respondents filed October 29, 2021, they submit that
the application of the legal principles of subrogation between the Co-Guarantors should
be applied as follows:
49.
The application of these principles to the facts before this Court is
straightforward. Firstly, NPL has a secured claim for indemnity against the
Borrowers in the amount of CDN $28,579,000. Secondly, it has secured claims
against the Unlimited Guarantors (897, 887 and NIP). The maximum liability of
the three Unlimited Guarantors is CDN $66,466,000 each, and for the limited
guarantor (NPL) it is CDN $24,698,000 (US $20,000,000 at the October 28,
2021 Bank of Canada exchange rate). The total of the maximum liabilities of
these four companies is $224,096,000. The ratio of NPL’s maximum liability to
the maximum liability of the Unlimited Guarantors is 11 percent ($24,698,000
divided by $224,096,000). Accordingly, the amount for which NPL is responsible
is $7,311,260 (11 percent of $66,466,000). Since the amount actually paid by
NPL was $28,579,000, NPL overpaid by $21,267,740 ($28,579,000 less -27-
$7,311,260). In the result, the three Unlimited Guarantors each owe NPL a
contribution of $7,089,246.
50.
Since NPL’s subrogated claims against the Borrowers and the Unlimited
Guarantors are secured, any (unsecured) inter-company debts owed by NPL(or
NPL’s owner) to the other respondents are irrelevant to an assessment of NPL’s
rights. This is to say that no matter the state of unsecured inter-respondent
debt involving NPL and NEL, the Receiver cannot prevent NPL from executing
on its security: in subrogation, set-off is not available, because the claims to be