Bellair Ventures Inc.

Decision

Headnote

National Policy 11-203 Process for Exemptive Relief Applications in Multiple Jurisdictions -- An issuer (a capital pool company) proposes to enter into a reverse take-over transaction with a target company -- The proposed transaction, if completed, will serve as the issuer's qualifying transaction under Policy 2.4 Capital Pool Companies of the TSX Venture Exchange (TSXV) -- The issuer applied for relief from the requirements in section 4.10(2)(a)(ii) of National Instrument 51-102 Continuous Disclosure Obligations (NI 51-102) and Item 5.2 of Form 51-102F3 Material Change Report to file, in respect of the proposed transaction, historical audited annual financial statements of the target company for the years ended December 31, 2008 and December 31, 2009 -- Target company is unable to provide the specified historical financial statements -- Target company has made every reasonable effort to obtain copies of, or reconstruct, the historical accounting records necessary to prepare and audit the specified historical financial statements, but such efforts were unsuccessful -- Issuer to provide alternative financial disclosure of target company in filing statement for qualifying transaction required under TSXV policies, including audited financial statements of target company for the year ended June 30, 2011 -- Relief granted, subject to condition that filing statement contains the alternative financial disclosure and that the filing statement is filed on SEDAR following acceptance by TSXV.

Applicable Legislative Provisions

National Instrument 51-102 Continuous Disclosure Obligations, s. 4.10(2)(a)(ii).

Form 51-102F3 Material Change Report, Item 5.2.

September 14, 2011

IN THE MATTER OF

THE SECURITIES LEGISLATION OF

ONTARIO

(THE JURISDICTION)

AND

IN THE MATTER OF

THE PROCESS FOR EXEMPTIVE RELIEF

APPLICATIONS IN MULTIPLE JURISDICTIONS

AND

IN THE MATTER OF

BELLAIR VENTURES INC.

(THE FILER)

DECISION

Background

The principal regulator in the Jurisdiction has received an application from the Filer for a decision under the securities legislation of the Jurisdiction of the principal regulator (the Legislation) for exemptive relief (Exemption Sought) from the requirements in section 4.10(2)(a)(ii) of National Instrument 51-102 Continuous Disclosure Obligations (NI 51-102) and item 5.2 of Form 51-102F3 Material Change Report (51-102F3) to file, in respect of the Acquisition (as defined below), historical audited annual financial statements for Waste Excellence Corporation (WEC) for the years ended December 31, 2008 and December 31, 2009.

Under the Process for Exemptive Relief Applications in Multiple Jurisdictions (for a passport application):

(a) the Ontario Securities Commission is the principal regulator for this application; and

(b) the Filer has provided notice that section 4.7(1) of Multilateral Instrument 11-102 Passport System is intended to be relied upon in British Columbia and Alberta (collectively with Ontario, the Jurisdictions).

Interpretation

Terms defined in National Instrument 14-101 Definitions have the same meaning if used in this decision, unless otherwise defined.

Representations

This decision is based on the following facts represented by the Filer:

Filer

1. The Filer is a capital pool company, as such term is defined in the policies of the TSX Venture Exchange Inc. (the Exchange or TSXV), and is incorporated under the Canada Business Corporations Act. The Filer's head office is 10 Bellair Street, Suite 509, Toronto, Ontario. The Filer's financial year end is August 31.

2. The Filer is a reporting issuer in the Jurisdictions and is not in default of securities legislation in any jurisdiction.

3. The common shares of the Filer are listed and posted for trading on the NEX branch of the Exchange under the trading symbol "BVI.H".

KNR

4. KNR Management Inc. (KNR, and together with its wholly-owned subsidiaries, the KNR Group) is a corporation incorporated under the Business Corporations Act (Ontario). KNR's financial year end is June 30.

5. KNR is not a reporting issuer in any jurisdiction of Canada. KNR is not in default of securities legislation in any jurisdiction.

6. KNR's principal business is the operation of a waste transfer and recycling facility in Vaughan, Ontario.

WEC

7. WEC is a corporation incorporated under the Business Corporations Act (Ontario). WEC's financial year end is December 31.

8. WEC is not a reporting issuer in any jurisdiction of Canada. WEC is not in default of securities legislation in any jurisdiction.

Proposed Transaction

9. The Filer entered into a transaction agreement dated February 1, 2011 with R. DiBattista Investments Inc. (the Vendor) and KNR and will enter into agreements with certain employees and consultants of KNR pursuant to which the Filer will purchase, and the Vendor and such employees and consultants will sell, all of the issued and outstanding common shares of KNR (the Acquisition). A portion of the consideration payable by the Filer in respect of the Acquisition includes the retirement of certain loans outstanding by the Vendor and the assumption, in KNR, of certain debt obligations.

10. The Acquisition will be a "reverse takeover" as defined in NI 51-102 and will serve as the Filer's "qualifying transaction" under TSXV Policy 2.4 Capital Pool Companies. In connection with the qualifying transaction, the Filer will be filing its filing statement (the Filing Statement) in the form of Form 3B2 Information Required in a Filing Statement for a Qualifying Transaction (TSXV Form 3B2) pursuant to the policies of the Exchange. TSXV Form 3B2 requires disclosure of financial statements of the Filer and KNR prescribed by National Instrument 41-101 General Prospectus Requirements and Form 41-101F1 Information Required in a Prospectus (Form 41-101F1). In addition to applying to the principal regulator for the Exemption Sought, the Filer has also applied to the Exchange for a waiver from the equivalent financial statement requirements in TSXV Form 3B2.

11. Immediately prior to and in connection with the Acquisition, KNR (directly and indirectly through the KNR Group) will acquire certain assets of WEC (the WEC Assets), such assets being a Certificate of Approval issued by the Ministry of the Environment (Ontario) bearing No. A 230634 and certain working capital and other chattels from WEC's court-appointed receiver, SF Partners Inc. (the Receiver). Pursuant to the purchase agreement to be entered into by KNR, the Receiver and certain other parties, the WEC Assets to be purchased by KNR from the Receiver will be purchased free and clear of all liens and encumbrances. In particular, the Receiver will apply to the Ontario Superior Court of Justice for a vesting order to convey the WEC Assets to KNR free and clear of all liens and encumbrances.

Financial Statements of WEC

12. By order of the Ontario Superior Court of Justice dated November 10, 2008, the Receiver was appointed to take control of the business and assets of WEC (the Business). A member of the KNR Group was subsequently appointed agent of the Receiver to assume control of and reinstate the operation of the Business. For the purposes of TSXV Form 3B2 and item 32.1 of Form 41-101F1 Information Required in a Prospectus, WEC is considered a predecessor to KNR with respect to the Business.

13. Prior to the appointment of the Receiver, there was an acrimonious dispute between the shareholders and management of WEC which included, among other things, allegations of misappropriation of funds and lack of adequate accounting in respect of the company's operations. The basis of the dispute among management and the shareholders led to the commencement of litigation between the parties and was one of the factors which precipitated the application for, and the appointment of, the Receiver.

14. At the time of the appointment of the Receiver, the operations of WEC had been dormant for a considerable period of time and there were no employees or officers of WEC attending at its premises at 10525 Keele Street, Vaughan, Ontario on a permanent basis.

15. In an attempt to secure the financial information and books and records of WEC upon its appointment as receiver, the Receiver made enquiries of representatives of WEC's secured creditors who had brought the application for the appointment of the Receiver, and of parties to the dispute between the shareholders and management of WEC. As a result, the Receiver was able to secure certain physical financial and accounting records of WEC, including hard copies of certain accounts receivable lists, accounts payable lists, various government filings, supplier invoices and some limited customer information.

16. In November and December 2008, the Receiver requested information from prior management of WEC in respect of the existence and location of WEC's computer systems which might hold its general ledgers, financial and accounting records, or any additional financial information. The Receiver did not receive any additional financial information or computer systems housing general ledgers or financial or accounting records from WEC's prior management.

17. In September 2010, the Receiver made further inquiries of WEC's external accountant who advised the Receiver that their involvement with WEC prior to its receivership was limited to preparing statutory filings and that the external accountant did not have any relevant financial or accounting records in respect of WEC.

18. The Receiver was not able to locate any computer systems with which WEC maintained its accounting records or general ledgers on the company's premises.

19. Following its search of WEC's premises at 10525 Keele Street, Vaughan, Ontario, repeated requests for information from prior management and shareholders of WEC, external accountants of WEC and representatives of WEC's secured creditors, and its review of the limited accounting records it took possession of upon its appointment as Receiver, the Receiver concluded that:

(a) WEC's financial and accounting books and records were incomplete, inaccurate, unreliable and grossly deficient insofar as the Receiver was aware that not all transactions were recorded, various source documents were not available, and the records that the Receiver recovered did not appear to have correctly recorded all transactions;

(b) payments made to WEC in respect of accounts receivable were not reflected in the physical documents found on the premises;

(c) WEC's accounts payable list was inaccurate or incomplete;

(d) WEC engaged in numerous cash transactions which would make it difficult, in not impossible, to determine the completeness of revenues;

(e) no additional financial or accounting records in respect of WEC existed or could be located;

(f) WEC maintained no computer system to maintain its general ledgers or financial or accounting records or that such computer systems had been removed from the premises prior to its appointment as Receiver; and

(g) WEC maintained no internal controls in respect of its accounting systems to ensure the production of accurate financial information.

20. The Receiver made one filing on November 10, 2010 in the public record on the Ontario Superior Court of Justice in relation to its role as receiver for WEC. The Receiver did not provide any financial information or reports to the court.

21. The Business was recommenced under the control of a member of the KNR Group as agent for the Receiver in May 2009 and the audited consolidated financial statements of KNR reflect the financial results of the Business since such date.

22. KNR and the Receiver have made every reasonable effort to obtain copies of, or reconstruct, the historical accounting records necessary to prepare and audit the financial statements of WEC for the fiscal periods prior to May 2009, but such efforts have been unsuccessful. As such, to the extent they may exist, neither KNR nor the Receiver is able to access the underlying financial and accounting records and source documents to be able to prepare financial statements for WEC in accordance with GAAP.

23. The inability to prepare the prescribed financial statements for WEC for the period prior to May 2009 is outside the Filer's control.

24. A combination of the following factors render the preparation and delivery of the financial statements of WEC for the period prior to May 15, 2009 impossible:

(a) KNR has been advised by the Receiver that historical financial statements for WEC are not available;

(b) the Receiver made every reasonable effort to obtain access to, or copies of, the historical financial and accounting records of WEC necessary to prepare applicable historical financial statements but such efforts were unsuccessful as the Receiver was unable to locate complete and accurate accounting records at WEC's premises; and

(c) the accounting records available consisted of financial and accounting records that were not properly maintained prior to the appointment of the Receiver, with evidence that not all revenues and expenses were properly recorded.

25. WEC's historical financial accounts are incomplete and inaccurate and, if full records existed, they would not be reliable to prepare meaningful or relevant financial statements which could provide current or future shareholders of the Filer with an accurate representation of the Business prior to May 15, 2009.

26. The Filing Statement will disclose the reasons why the historical audited financial statements of WEC for the years ended December 31, 2008 and December 31, 2009 are not available.

Historical Financial Statements

27. With respect to reverse takeover transactions, section 4.10(2)(a)(ii) of NI 51-102 and item 5.2 of 51-102F3 require that a reporting issuer file, within specified periods, the financial statements as prescribed by the appropriate prospectus form for the reverse takeover acquirer. The reverse takeover acquirer in respect of the Filer is KNR.

28. The Filer was incorporated on August 22, 2008. The Filer will include in the Filing Statement the following financial statements (the Filer Financial Statements):

(a) audited annual financial statements of the Filer for (i) the period from incorporation on August 22, 2008 to September 30, 2008, (ii) the 12 months ended August 31, 2009 and (iii) the 12 months ended August 31, 2010;

(b) interim financial statements of the Filer for the 9 months ended May 31, 2011 (with comparatives);

(c) pro forma financial statements of the Filer required by item 48 of TSXV Form 3B2, including a pro forma balance sheet as at the date of the Filer's most recent balance sheet (May 31, 2011) included in the Filing Statement as if the Acquisition had taken place at that date; and

(d) if the Filing Statement is not filed by December 29, 2011 (the date that is 120 days after the Filer's financial year end), any additional or updated financial statements of the Filer required by items 44.1, 44.2 and 48.1 of TSXV Form 3B2 and items 32.2 and 32.3 of Form 41-101F1 in respect of any recently completed financial year or interim period, as applicable.

29. The entities in the KNR Group were incorporated on various dates throughout 2009 and 2010. KNR will include in the Filing Statement the following financial statements (the KNR Financial Statements):

(a) audited annual consolidated financial statements of KNR for (i) the period from incorporation of the first entity in the KNR Group on May 15, 2009 to June 30, 2009, (ii) the 12 months ended June 30, 2010, and (iii) the 12 months ended June 30, 2011; and

(b) if the Filing Statement is not filed by November 29, 2011 (the date that is 60 days after the end of the first interim period in KNR's current financial year), any additional financial statements of KNR required by items 46.1 and 46.2 of TSXV Form 3B2 and items 32.2 and 32.3 of Form 41-101F1 in respect of any recently completed interim period or financial year, as applicable.

The KNR Financial Statements will include the financial results of the operation of the Business.

30. The Filer will be relying on the exception contained in item 48.2 of TSXV Form 3B2 and will not be including a pro forma income statement of the Filer in the Filing Statement.

31. The Filer Financial Statements and the KNR Financial Statements (collectively, the Proposed Financial Disclosure) will contain sufficient information to permit investors to make a reasoned assessment of the Filer's business following completion of the Acquisition.

32. Following the closing of the Acquisition, the Filer will:

(a) issue and file a news release and file a material change report that disclose the closing of the Acquisition and refer to the Filing Statement filed on SEDAR at www.sedar.com, and

(b) file the financial statements for KNR required by section 4.10(2)(a)(i) of NI 51-102 for all annual and interim periods ending before the date of the Acquisition and after the date of the financial statements included in the Filing Statement. These financial statements will include the financial results of the operation of the Business.

Decision

The principal regulator is satisfied that the decision meets the test set out in the Legislation for the principal regulator to make the decision.

The decision of the principal regulator under the Legislation is that the Exemption Sought is granted provided that:

1. the Filing Statement includes the Proposed Financial Disclosure; and

2. the Filing Statement is filed on SEDAR following acceptance by the Exchange.

"Michael Brown"
Assistant Manager, Corporate Finance
Ontario Securities Commission