Heather Fisher

In a Companies' Creditors Arrangement Act proceeding, the applicant Hudson's Bay Company ULC and related entities sought approval of an Art Collection Auction Process Order to authorize the auction of artwork and artifacts held by the company.

The court approved the proposed auction procedures, which included both live and online auction components.

The court noted that certain items were excluded from the auction, including the Royal Charter, artifacts previously donated to the Manitoba Museum, the company's reference collection donated to the Archives of Manitoba, and war memorials.

Additionally, 24 artifacts believed to be of Indigenous origin or representative of Indigenous culture were excluded from the auction and would be donated to appropriate custodians in consultation with Indigenous communities.

The court found that the proposed procedures satisfied the applicable legal tests and represented the most appropriate process for disposing of the art collection while balancing the interests of creditors with cultural and historical considerations.

The defendants brought a motion seeking a partial sealing order in respect of designated confidential information they wished to rely upon for a jurisdiction motion.

The confidential information related to the defendants' corporate organization and structure, web crawling and fetching processes, and model training and inference processes.

The court applied the three-part test from Sherman Estate v. Donovan and Sierra Club of Canada v. Canada (Minister of Finance) to determine whether to grant the sealing order.

The court found that disclosure of the confidential information posed a serious risk to the important public interest of fair competition in the artificial intelligence industry, that no reasonable alternative measures would prevent this risk, and that the benefits of the order outweighed its negative effects on the open court principle.

The partial sealing order was granted.

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 appeal concerns who is liable for outstanding municipal taxes in a receiver's sale of assets with an approval and vesting order (AVO).

The motion judge found the purchaser liable because the taxes were not yet due at closing.

The Court of Appeal reversed, holding that under s. 307(3) of the Municipal Act, liability for the taxes arose on January 1 of the relevant taxation years, prior to closing.

Therefore, the liability remained with the vendor (the receiver) and was vested out of the purchased assets by the AVO.

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.

Central 1 Credit Union applied to appoint a receiver over 2139770 Ontario Inc. following defaults on a $43.5 million credit facility.

The parties had entered into a forbearance agreement, but the debtor failed to deliver required underwriting documents and appraisals by the agreed deadline.

The court found the defaults were not trivial but granted the debtor a brief extension to cure the breaches and provide the missing information, effectively granting relief from forfeiture.

If the debtor fails to meet the strict new deadlines, a receiver will be appointed.

The plaintiff, Erwin Banfi, brought a motion for approval of a class action settlement and class counsel fees against multiple municipal and provincial defendants concerning alleged increased flood risk and reduced property values due to overdevelopment in Oakville.

The action, initially premised on property diminution, shifted focus due to difficulties in proving causation and quantifying individual damages.

The proposed settlement involved a $500,000 payment by defendants to the Intact Centre on Climate Adaptation for a flood education and protection program for class members, and class counsel fees of $495,000.

The court approved the cy-près settlement, finding it fair, reasonable, and in the best interests of the class, given the litigation's challenges and the material benefit provided to class members.

Class counsel fees and a $5,000 honorarium for the representative plaintiff were also approved.

The plaintiffs brought a motion seeking the appointment of an interim receiver over the shares of one of the defendants in several companies involved in land development projects.

The parties, who are shareholders in these companies, had a significant falling out, leading to defaults on secured loans.

The plaintiffs argued that a receiver was necessary to refinance debt and maximize value.

The court determined that the appropriate test for the interlocutory receiver appointment was the RJR MacDonald test, with an elevated 'strong prima facie case' standard due to the Mareva-like nature of the relief.

The court found that the plaintiffs failed to meet the merits requirement, as they asserted no legal or beneficial interest in the defendant's shares and the memorandum of understanding did not obligate the defendant to contribute further funds.

Furthermore, the court found no irreparable harm and that the balance of convenience did not favor the appointment, concluding that a receivership was not an appropriate remedy for a shareholder dispute where the moving party sought to eliminate the other party's control over their own shares.

The Auditor General of Ontario appealed a lower court decision regarding the interpretation of section 10 of the Auditor General Act, R.S.O. 1990, c.

A.35.

The core issue was whether the Act confers authority on the Auditor General to access and compel disclosure of privileged information (solicitor-client, litigation, and settlement privilege) from a grant recipient, Laurentian University of Sudbury, during a value-for-money audit.

The Court of Appeal dismissed the appeal, affirming that statutory language must demonstrate a clear, explicit, and unambiguous intent to abrogate privilege, and the Auditor General Act's provisions did not meet this high standard.

The respondent husband brought a motion to vary interim child support and parenting orders due to alleged material changes in circumstances.

The court dismissed the motion to vary child support, finding no actual change in circumstances that would warrant revisiting the interim order before trial.

However, the court granted the motion to increase the father's parenting time and establish joint parental decision-making, emphasizing the best interests of the children and the material change in circumstances due to the withdrawal of criminal charges against the father and the passage of time.

The Applicants in a CCAA proceeding sought approval of an amended Share Purchase Agreement (SPA) and a reverse vesting order (RVO) to facilitate the sale of their business as a going concern.

The transaction aimed to preserve cannabis licenses, maintain business operations, and retain approximately 95% of employees.

The motion was unopposed, receiving strong support from the two senior secured creditors (2125028 Ontario Inc. and Marzilli) and the Monitor.

The court found the RVO appropriate, satisfying the factors under CCAA section 36, the Soundair Principles, and the Harte Gold framework.

Ancillary relief, including third-party releases for parties crucial to the restructuring, such as the stalking horse bidder (Cardinal) who provided interim financing and waived fees, was also granted.

The stay period was extended to allow for post-closing matters.

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 Auditor General of Ontario sought declarations that it had the authority under the Auditor General Act to compel grant recipients, specifically Laurentian University, to provide information and records subject to solicitor-client, litigation, or settlement privilege for audit purposes.

Laurentian University argued that the Act did not contain the clear and unambiguous language required to abrogate such fundamental privileges.

The court dismissed the Auditor General's application, holding that sections 10 and 27.1 of the Auditor General Act did not explicitly or unambiguously confer the power to compel disclosure of privileged information, and that privilege cannot be abrogated by inference.

The defendants brought a motion to dismiss the plaintiffs' action for delay under Rules 48.14 and 24.01 of the Rules of Civil Procedure.

The plaintiffs brought a cross-motion to extend the deadline to set the action down for trial.

The court found that the plaintiffs had an acceptable explanation for the delay, which included the time required to comply with undertakings, retain experts, and the impact of the COVID-19 pandemic.

The court also found that the defendants failed to establish non-compensable prejudice.

The defendants' motion was dismissed, and the plaintiffs' cross-motion was granted, establishing a timetable for mandatory mediation and setting the action down for trial.