Amanda Klein

The appellant, acting as trustee for noteholders, appealed the dismissal of its application against the respondent mining corporation.

The appellant argued that the respondent's failure to obtain foreign environmental permits triggered a 'Project Change of Control' under the trust indentures, and that the respondent improperly sold equipment purchased with note proceeds.

The appellant also sought an oppression remedy under the Canada Business Corporations Act, arguing the respondent was insolvent and its directors should have prioritized creditor interests.

The Court of Appeal dismissed the appeal, finding no breach of the trust indentures and upholding the application judge's conclusion that the directors' business decisions were reasonable and did not constitute oppression, even in the context of financial distress.

In a supplementary endorsement following an oral judgment, the Court of Appeal for Ontario addressed the allocation of proceeds of realization under the respondent bank's debt instruments.

The parties agreed that the proceeds should be allocated first to expenses, second to interest, and third to principal, which the court ordered.

The court declined to consider the balance of the appellants' supplementary submissions as they went beyond the scope of the court's invitation.

KJS took an assignment of National Bank's debt and security and realized on the portions provided by the appellants.

The trial judge awarded judgment to KJS for the shortfall.

On appeal, the Court of Appeal upheld the trial judge's interpretation of the share purchase agreement, finding that the appellants breached their obligations and could not claim the benefit of the KJS security.

However, the Court allowed the appeal in part to vary the damage calculation, finding that KJS was not entitled to mitigate its damages by taking an assignment of the debt instruments.

The cross-appeal was dismissed.