David R. Byers

The appellant Superintendent of Financial Services appealed a CCAA judge's order lifting a stay of proceedings and ordering the debtor companies into bankruptcy.

The appellant argued that a deemed trust arose under the Pension Benefits Act upon the wind up of two pension plans during the CCAA proceedings, and that this trust should have priority over secured creditors.

The Court of Appeal dismissed the appeal, holding that the CCAA judge reasonably exercised his discretion to transition the proceedings to bankruptcy under the BIA, where provincial deemed trusts are rendered inoperative by the doctrine of federal paramountcy.

Multiple tobacco manufacturer defendants sought partial indemnity costs of approximately $300,000 after withdrawing previously scheduled motions to strike the Crown’s statement of claim in a health care cost recovery action under the Tobacco Damages and Health Care Costs Recovery Act.

The defendants argued they were the successful parties because their motions prompted extensive amendments to the pleading and that the Crown delayed notifying them of its intention to amend.

The court held that the amendments addressed only some of the alleged deficiencies and that significant legal issues remained unresolved when the defendants chose to withdraw the motions.

As a result, success on the motions was considered divided.

Exercising discretion under s. 131 of the Courts of Justice Act, the court ordered that each side bear its own costs.

The plaintiffs brought a proposed class action alleging that Air Canada improperly collected U.S. transportation taxes on tickets purchased in Canada and between Canada and the U.S., thereby giving extra-territorial effect to U.S. tax laws.

The motion judge found the Ontario court had jurisdiction but stayed the claims of passengers who paid in the U.S. on the basis of forum non conveniens.

On appeal and cross-appeal, the Court of Appeal held that while Ontario courts have jurisdiction to determine if a foreign law is being enforced extra-territorially, the entire action should be stayed on the basis of forum non conveniens.

The principle of comity requires that the interpretation of the U.S. Internal Revenue Code be undertaken by U.S. authorities first.

Following the dismissal of the foreign tobacco defendants' jurisdictional appeals, the Court of Appeal determined the costs of the appeals.

The appellants argued that costs should be capped at $100,000, asserting that the Crown treated the five appeals as one by filing a common factum.

The Court rejected this argument, finding no $100,000 ceiling exists for costs awards in the Court of Appeal.

Given the complexity, the $50 billion stakes, and the necessity of responding to five separate appeals, the Court fixed the Crown's partial indemnity costs at $237,332.50, apportioned between the BAT and RJR appellants.

In a liquidating CCAA proceeding, the court considered whether a deemed trust under the Pension Benefits Act arose in respect of pension plan wind-up deficiencies, giving priority over secured creditors.

Applying the Supreme Court's decision in Indalex, the court held that no deemed trust arose because the pension plans were not wound up prior to the CCAA Initial Order.

The court granted the second lien lenders' motion to lift the stay of proceedings to allow a bankruptcy petition to proceed, concluding that imposing a provincial deemed trust priority in the middle of an insolvency proceeding would undermine the predictability and flexibility of the CCAA regime.

Ontario sued foreign and domestic tobacco manufacturers under the Tobacco Damages and Health Care Costs Recovery Act, 2009 to recover health care costs.

Six foreign defendants brought a motion to stay or dismiss the action for lack of jurisdiction, which was dismissed.

The foreign defendants appealed.

The Court of Appeal dismissed the appeal, finding that the statutory claim was analogous to a tort committed in Ontario, establishing a presumptive connecting factor under the Van Breda framework.

The Court also upheld the motion judge's findings that Ontario established a good arguable case and affirmed the costs award.

In CCAA proceedings involving a mining company, competing motions were brought concerning the restructuring process.

The debtor sought directions regarding the procedure for resolving noteholder claims and the alleged misuse of confidential information by certain creditors, while the noteholders sought an order convening a meeting of creditors to vote on their proposed plan of arrangement.

The court held that calling a creditors’ meeting was premature because the proposed plan conflicted with the debtor-in-possession financing facility, had been introduced without meaningful consultation, and unresolved claims and litigation issues could affect voting rights and recoveries.

The court dismissed the noteholders’ motion without prejudice and declined to order disclosure sought by the debtor.

The stay of proceedings was extended to facilitate continued negotiations and mediation.

The appellants appealed from the Court of Appeal's reversal of the CCAA court's decision regarding the priority of pension plan wind-up deficiency claims over court-ordered DIP financing charges.

The majority held that wind-up deficiencies under s. 75(1)(b) of the Pension Benefits Act were subject to a statutory deemed trust under s. 57(4), but that the deemed trust was superseded by the DIP charge by virtue of the doctrine of federal paramountcy.

The majority further held that while the employer-administrator breached its fiduciary duty by failing to ensure the pension plan beneficiaries had adequate notice and representation in the CCAA proceedings, a constructive trust was not an appropriate remedy because the breach did not result in an identifiable asset that it would be unjust for the wrongdoer to retain.

The applicants, comprising the Cinram Group, sought an Initial Order under the CCAA.

The court found that the applicants were debtor companies and insolvent, facing a looming liquidity crisis.

The court granted the Initial Order, which included a stay of proceedings extended to non-applicant subsidiaries, authorization to pay critical pre-filing obligations, and approval of various charges including a $15 million DIP financing charge, a $3.5 million administration charge, a $13 million directors' and officers' charge, and a $3 million KERP charge.

The court also authorized the foreign representative to seek recognition under Chapter 15 of the US Bankruptcy Code.

Following dismissal of jurisdiction motions brought by several foreign tobacco companies in a health care cost recovery action, the court determined costs.

The unsuccessful moving parties argued that earlier evidentiary and procedural steps constituted separate proceedings and sought substantial costs for those steps.

The court rejected that characterization, holding that all preliminary steps formed part of the overall jurisdiction challenge and that distributive costs awards based on success on individual steps should be avoided.

Applying Rule 57.01 factors and general costs principles, the court found the responding party was the successful party and entitled to costs, subject to reductions reflecting partial success on certain evidentiary and motion issues.

The court awarded partial indemnity costs of $425,000 plus disbursements, allocating liability between two groups of moving defendants.

The Crown brought an action under the Tobacco Damages and Health Care Costs Recovery Act against several domestic and foreign tobacco companies, claiming $50 billion for health care costs related to tobacco disease.

Six foreign defendants brought motions to set aside service ex juris and stay or dismiss the action, arguing the Ontario court lacked jurisdiction simpliciter.

The court dismissed the motions, finding that the Crown had established a good arguable case that the foreign defendants conspired and acted in concert to commit tobacco-related wrongs, establishing a real and substantial connection to Ontario.

The appellant appealed an order resolving a priority dispute between two secured creditors of an insolvent corporation.

The dispute involved a circular priority problem created by multiple financing agreements.

The motion judge applied a partial subordination theory, finding that the respondent intended to subordinate its interest only to a third-party lender, not to the appellant.

The Court of Appeal upheld the motion judge's decision, agreeing that partial subordination produced an equitable result and that complete subordination would confer an unintended windfall on the appellant.

The appeal was dismissed.

The Attorney General of Ontario and the Ontario Provincial Police appealed a motions judge's order refusing to dissolve an injunction against Aboriginal protestors occupying a residential development, and requiring the Attorney General to take carriage of criminal contempt proceedings while reporting back to the court.

The Court of Appeal allowed the appeal in part.

It held that the motions judge erred in refusing to dissolve the injunction after the Ontario government purchased the property and consented to the occupation.

The Court maintained the referral of the contempt matters to the Attorney General, but imposed strict conditions, finding that the motions judge's previous contempt process was fundamentally flawed for denying procedural fairness and improperly interfering with police and prosecutorial discretion.

The appellant appealed an order dismissing its motion to stay the action on the grounds of forum non conveniens.

The Court of Appeal found no error in principle in the motions judge's conclusion that Ontario was the proper forum, noting that Ontario law was likely the proper law of the insurance contract and that key witnesses were located in Ontario.

The appeal was dismissed with costs.

The appellant company appealed a decision of the Ontario Securities Commission which found that the company had waived solicitor-client privilege over certain legal opinions by providing them to its auditor.

The Divisional Court allowed the appeal, holding that statutory disclosure of privileged documents to an auditor constitutes a limited waiver for audit purposes only, not an absolute waiver.

Furthermore, the auditor's subsequent unauthorized disclosure of the documents to Commission staff did not waive the privilege, as the auditor lacked the authority to do so.

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.

In an addendum to judgment regarding costs of an appeal, the respondents sought costs totaling $132,145.72.

The appellants opposed, seeking a stay of costs for one insolvent respondent, arguing for the application of the pre-2002 party and party costs regime, and challenging the hourly rates of junior counsel.

The Court of Appeal dismissed the stay request, held that the new costs grid under O. Reg. 284/01 applies retrospectively to services rendered before January 1, 2002, and reduced the hourly rates for certain junior counsel.

Total costs of $122,998.02 were awarded to the respondents on a partial indemnity basis.

The appellants, holders of debentures issued by BCED, appealed a trial judgment finding that a series of corporate reorganizations and asset transfers did not breach a successor obligor clause in the trust indenture.

The clause prohibited BCED from transferring 'all or substantially all' of its assets unless the transferee assumed the debenture debt.

The Court of Appeal dismissed the appeal, holding that the asset transfers did not meet either the quantitative or qualitative threshold to constitute 'all or substantially all' of BCED's assets.

The Court also found that a subsequent guarantee and foreclosure did not constitute a prohibited 'transaction' under the trust indenture, as the indenture expressly permitted BCED to incur and secure senior indebtedness.