Andrew J. Hatnay

The company TCT became insolvent and an interim receiver, KPMG, was appointed.

The order appointing KPMG stated it could not be considered a successor employer and prohibited proceedings against it without leave.

KPMG terminated unionized employees and sold assets to a new company, which hired some employees without union representation.

The union sought leave under s. 215 of the Bankruptcy and Insolvency Act to bring a successor employer application before the Ontario Labour Relations Board.

The Supreme Court held that the bankruptcy court lacks jurisdiction to determine successor employer status, which belongs exclusively to the labour board.

The Court also held that the traditional Mancini test applies to s. 215 leave applications, requiring only a prima facie case, and granted the union leave to proceed.

The appellant trustee was successful on appeal and sought costs against the respondent employees.

The employees argued they should be shielded from costs as public interest litigants or under the principles of the Class Proceedings Act.

The Court of Appeal rejected these arguments, finding the employees had a direct financial stake and the matter was not a class action.

The court awarded the trustee costs for the proceedings before the registrar, the Superior Court, and the Court of Appeal, totaling approximately $24,000.

Prior to its bankruptcy, the bankrupt company deducted pension contributions from its employees' pay but failed to remit them, instead commingling the funds in its general bank account.

The account balance subsequently fluctuated and went into a negative balance before returning to a positive balance on the date of bankruptcy.

The employees claimed the unremitted contributions as trust property under s. 67(1)(a) of the Bankruptcy and Insolvency Act.

The Court of Appeal held that while a trust was initially created, the trust property ceased to be identifiable and could not be traced once the account went into overdraft.

Consequently, the funds in the account at the date of bankruptcy were not trust funds, and the Trustee's disallowance of the employees' claim was upheld.

The applicants sought a stay of the Court of Appeal's order, which had reversed a supervising judge's decision to remove two directors from the board of a company undergoing CCAA restructuring, pending their application for leave to appeal to the Supreme Court of Canada.

The Court of Appeal first determined it had jurisdiction under s. 65.1(1) of the Supreme Court Act to consider the stay application.

Applying the RJR-MacDonald test, the court found that while there was a serious issue to be tried, the balance of convenience and the interests of justice favoured denying the stay, as granting it would effectively implement the supervising judge's order that the court had already found was made without jurisdiction.

During a CCAA restructuring of Stelco Inc., the board of directors appointed two new directors who were associated with major shareholders.

Employee stakeholders, fearing the new directors would favour shareholder interests over employee interests in the restructuring, successfully applied to the supervising judge to have the directors removed based on a reasonable apprehension of bias.

The Court of Appeal granted leave to appeal and allowed the appeal, holding that the supervising judge lacked inherent jurisdiction or statutory authority under section 11 of the CCAA to remove duly appointed directors.

The Court further held that the administrative law concept of reasonable apprehension of bias does not apply to corporate directors, whose conduct is governed by fiduciary duties and the business judgment rule.

The moving parties, two directors who were removed from the board of a company undergoing restructuring under the Companies' Creditors Arrangement Act, sought an order expediting the hearing of their motion for leave to appeal the removal order.

The court granted the motion to expedite, finding that the fast-moving and unpredictable nature of CCAA proceedings required a generous view of urgency to provide the board with certainty regarding its composition during a critical phase of restructuring.

The parties were unable to agree on the form of the Order to implement the court's reasons for decision dated April 2, 2004.

The court resolved two issues of clarification regarding the interim receiver's protection from personal liability and the referral of the s. 215 BIA decision back to the bankruptcy judge.

The main issue in dispute was the status of paragraph 15 of the original ex parte order concerning the interim receiver's immunity and potential liability as a successor employer.

The court attached the form of order to be signed by the Registrar without providing further reasons.

The debtor company became insolvent and an interim receiver was appointed.

The receiver terminated all employees but continued operations to sell the business as a going concern.

The union sought to bring successor employer proceedings before the Ontario Labour Relations Board (OLRB).

The bankruptcy judge denied leave under the Bankruptcy and Insolvency Act (BIA).

On appeal, the Court of Appeal held that while s. 47(2) of the BIA does not authorize a bankruptcy court to determine successor employer status, s. 215 gives the court jurisdiction to deny leave to proceed before the OLRB based on bankruptcy considerations.

However, the bankruptcy judge erred by effectively determining the successor employer issue himself.

The appeal was allowed and the matter remitted to the bankruptcy court.

The union brought a motion for leave to appeal an order that amended a receivership order to protect the receiver from successor employer status and denied the union leave to proceed against the receiver before the Ontario Labour Relations Board.

The Court of Appeal granted leave to appeal, finding that the legal issues regarding the relationship between bankruptcy courts and labour boards, and the status of a receiver as a successor employer, were significant to commercial practice and warranted consideration by the appellate court.