Haddon Murray

The Court of Appeal for Ontario dismissed an appeal by Denver Davis from two orders: one staying a proposed class action against Amazon in favour of arbitration, and the other dismissing the motion for certification of the class action.

The class action alleged Amazon was liable for breach of employment contracts, breach of good faith, unjust enrichment, and negligence, and sought damages on behalf of approximately 73,000 delivery workers.

The court held that the motion judge did not err in finding that Amazon was not a common employer of the delivery associates (DAs) employed by third-party logistics companies, and that the requirements for certification were not met.

The appeal was dismissed and costs awarded to the respondents.

The decision addresses motions regarding the appointment of representative counsel for current and former employees and retirees of Hudson’s Bay Company ULC and related entities in ongoing Companies’ Creditors Arrangement Act (CCAA) proceedings.

The Court declined to appoint any of the nominated law firms as representative counsel at this stage, instead appointing the Honourable Herman Wilton-Siegel as an independent third party to evaluate proposals and make a recommendation.

The Court also approved amendments to the Sale and Investment Solicitation Process (SISP) to remove the company’s art and artifact collection from the SISP and to appoint Heffel Gallery Limited to conduct a separate auction for the collection, subject to further court approval of procedures.

The reasons review the legal framework for appointing representative counsel and the importance of balancing stakeholder interests in complex insolvency proceedings.

The court considered an application by Aggregated Investments Inc. for the appointment of a receiver over the assets of the respondents, including real property, under the Courts of Justice Act and the Bankruptcy and Insolvency Act.

The application was dismissed.

The court found that a bona fide defence existed regarding the underlying debt, specifically whether Aggregated breached its duty of good faith by accepting a reduced recovery and shifting value to a related party.

The court held that the appointment of a receiver was not just or convenient in the circumstances, given the triable issue as to the propriety of the debt and the conduct of Aggregated.

This endorsement grants a brief adjournment in the Companies’ Creditors Arrangement Act (CCAA) proceedings involving Hudson’s Bay Company ULC and related entities, following ongoing discussions between the applicants and stakeholders.

The court extends the stay of proceedings, increases the Directors’ Charge, amends the relative priorities of charges, and approves the engagement of Reflect Advisors, LLC as financial advisor.

The court finds the requested relief appropriate, unopposed, and supported by the Monitor, and orders the requested amendments to the Initial Order.

The applicants, a group of real estate development entities (Ashcroft Homes Group), sought to extend an initial Companies' Creditors Arrangement Act (CCAA) stay of proceedings to facilitate a restructuring.

Secured creditors, representing 84% of the total secured debt, opposed the extension and instead moved for the appointment of interim receivers.

The court found the applicants' restructuring plan lacked substance, noted a significant loss of confidence in management due to past conduct and outdated property valuations, and determined that the collaborative receivership approach proposed by the majority of secured creditors was more appropriate.

The motion to extend the CCAA stay was dismissed, and the motions for the appointment of receivers were granted.

The People's Trust Company, as assignee of Enlightened Funding Corporation, brought a motion seeking an order to compel Deloitte Restructuring Inc., the court-appointed Receiver of Velocity Asset and Credit Corporation and 926749 Ontario Ltd., to produce documents relevant to the personal bankruptcy application against Hugh Waddell, the principal of the Respondents.

Despite Waddell's non-cooperation and previous adjournments, the court dismissed the motion.

The court found that the Receiver's appointment order, specifically section 4(m) concerning information sharing, was not broad enough to authorize production for purposes outside the receivership's primary objectives.

The court emphasized that the documents were sought to prosecute the bankruptcy application against Waddell, not to advance the receivership of the Respondents.

The court noted that other avenues exist within the Bankruptcy Application to compel such production.

In a proposed employment law class action, Amazon successfully resisted certification and obtained a stay for certain claims.

Amazon sought approximately $2.0 million in costs, while the plaintiff, Denver Davis, argued for an award of around $400,000.

The court, applying principles of reasonableness and access to justice in class proceedings, awarded Amazon costs on a partial indemnity basis of $750,000, finding both parties' requested amounts to be unreasonable.

The decision emphasized that costs should reflect what an unsuccessful party could reasonably expect to pay, not necessarily the successful party's actual costs, and acknowledged the public interest element in the plaintiff's claim.

The Limited Partners of YG Limited Partnership appealed a motion judge's order denying them standing to oppose a creditor's (CBRE Limited) appeal of a disallowed proof of claim under s. 135(4) of the Bankruptcy and Insolvency Act (BIA).

The Court of Appeal for Ontario dismissed the appeal, holding that limited partners do not possess a direct economic interest in the claim sufficient for common law standing, nor are they granted standing under s. 135(4) or s. 37 of the BIA.

The court emphasized that the BIA is a complete code designed for expeditious resolution of bankruptcy matters, and equity owners are generally excluded from direct participation in creditor claim appeals.

The appellants, pre-construction purchasers of townhouses and condominiums, appealed the dismissal of their motion for a certificate of pending litigation (CPL).

The original developer transferred the lands to a lender, Grand Grace, after defaulting on loans.

Grand Grace took title free of the unregistered agreements of purchase and sale and resold the properties.

The Superior Court of Justice dismissed the appeal, finding no palpable and overriding error in the Associate Justice's conclusion that the properties were not unique, damages were an adequate remedy, and the non-registration clauses in the agreements weighed against granting a CPL.

In a CCAA restructuring proceeding, the applicant debtors brought a motion to extend phase 2 of the Sale and Investment Solicitation Process (SISP), increase the DIP loan limit, approve a Key Employee Retention Plan (KERP), and extend the stay of proceedings.

The primary secured creditor opposed the motion, arguing the debtors had already had their chance at restructuring.

The court balanced the potential prejudice to the secured creditor against the public interest in preserving jobs and the debtors' role in serving remote communities.

The court granted partial relief, approving a modest DIP loan increase of $170,000, a KERP of $70,000, and a shorter SISP extension to March 21, 2023, while denying the stay extension at this time.

The Applicants in a CCAA proceeding moved for a reverse vesting order to approve a transaction with a purchaser related to a secured creditor, Marzilli.

The transaction would vest out the first-ranking security interest of another creditor, 212, and transfer its debt to a residual entity with no assets. 212 opposed the motion, arguing its debt assumption was part of the stalking horse bid that set the floor for the sales process.

The court applied the Third Eye and Harte Gold factors, finding that 212 had not consented to the vesting out of its interest and that the equities favoured 212.

The court dismissed the motion for the reverse vesting order, concluding it was not equitable to extinguish 212's first-ranking security interest under the circumstances.

The plaintiffs, purchasers of pre-construction condominium and freehold units, brought motions for certificates of pending litigation (CPLs) against the development property after the original developer became insolvent and transferred the property to a new developer.

The purchase agreements contained non-registration clauses prohibiting the registration of CPLs.

The court found that while there was a triable issue regarding an interest in land based on constructive trust, the non-registration clauses and the equitable factors from Dhunna—including the lack of uniqueness of the property, the adequacy of damages, and the prejudice to new innocent purchasers—weighed heavily against granting the CPLs.

The motions were dismissed.

The Court of Appeal for Ontario granted leave to appeal and allowed an appeal concerning the interpretation of section 215 of the Bankruptcy and Insolvency Act (BIA).

The motion judge had erred in finding that permission was not required to sue a trustee in bankruptcy, holding that actions against trustees in a personal capacity or alleging omissions fell outside the scope of s. 215.

The Court clarified that s. 215 applies when the alleged wrongdoing is predicated on the individual having the powers and responsibilities of a trustee, regardless of whether the claim asserts a "personal capacity." Furthermore, s. 215 applies to actions alleging omissions unless the omission relates to something specifically and expressly mandated by the BIA.

The matter was remitted to the bankruptcy court to determine whether permission to sue the trustee should be granted.

The plaintiffs moved to enforce an alleged settlement agreement with the defendant Seven Hills Group LLC, while Seven Hills brought a cross-motion for summary judgment to dismiss the negligence claim against it.

The court found no binding settlement agreement existed, as the parties had not agreed on essential terms regarding the scope and indemnity provisions of the release.

The court granted Seven Hills' motion for summary judgment, concluding that Seven Hills owed no duty of care to the plaintiffs, as its engagement letter with Xtreme Labs expressly limited its duties and prohibited reliance by third parties like the plaintiffs for the purpose of a management buyout.

The action against Seven Hills was dismissed, and costs were awarded to Seven Hills.

The receiver, Ernst & Young Inc., moved for approval of its activities and its fees and disbursements in the receivership of Hanfeng Evergreen Inc. The former CEO and his spouse opposed the motion, seeking conditions to protect their position in separate litigation and demanding further document disclosure to assess the fees.

The court approved the receiver's activities, noting that such general approval does not constitute fact-finding that would bind the objectors in other litigation.

The court also approved the fees and disbursements, finding them fair and reasonable under the Belyea factors, and rejected the objectors' demands for further docket disclosure as disproportionate and misdirected.