John Berry v. Lear Corporation, 2010 HRTO 1572

HUMAN RIGHTS TRIBUNAL OF ONTARIO

B E T W E E N:

John Berry

Applicant

-and-

Lear Corporation – Whitby Ontario Canada

Respondent

INTERIM DECISION

Adjudicator: Andrew M. Diamond

Date: July 20, 2010

Citation: 2010 HRTO 1572

Indexed as: Berry v. Lear Corporation

Introduction

1The respondent has brought a Request for Order During Proceedings seeking: the discontinuance and dismissal of the Application; in the alternative an order allowing the respondent to make full submissions with respect to the Tribunal’s Interim Decision 2010 HRTO 614, and in the further alternative an order extending the time for the filing of a Response to the Application.

2At the heart of the issue is that the respondent has been undergoing a restructuring within the regime of the Companies’ Creditors Arrangement Act R.S.C. 1985, c. C-36 as amended (the “CCAA”) and argues that, as the applicant’s Application predates the initial order under the CCAA, the applicant is now barred from continuing with this Application as he did not make a claim within the CCAA process and all such claims against the respondent are now barred by the order of the Court.

Background

3As set out in the respondent’s submissions, this Application was filed with the Tribunal on April 7, 2009 under section 34 of Part IV of the Human Rights Code, R.S.O. 1990, c. H.19, as amended (the Code). The Application was based upon events which occurred between April of 2008 and February of 2009. On July 9, 2009, the Ontario Superior Court of Justice (Commercial List) issued an Initial Order pursuant to the CCAA recognizing the proceedings commenced by Lear and related entities under Chapter 11 of Title 11 of the United States Code in the United States Bankruptcy Court for the Southern District of New York (“US Bankruptcy Court”) as a “foreign proceeding” under section 18.6(1) of the CCAA.

4One of the impacts of the Initial Order was that it stayed or suspended all proceedings which affected the respondent’s business unless and until leave of the Ontario Superior Court of Justice was obtained, or consent was granted by the respondent. The Court’s Order would apply to this Application.

5The respondent failed to file a Response in a timely fashion so, on July 30, 2009, being unaware of the CCAA proceeding and the resulting stay, the Tribunal issued a ”no response” decision, 2009 HRTO 1182, directing the respondent to deliver a Response by August 10, 2009 or be deemed in default. On August 10, 2009 the respondent advised the Tribunal of the stay. On October 20, 2009 the Tribunal issued a second Interim Decision, 2009 HRTO 1724, recognizing the stay.

6On March 22, 2010 the Tribunal issued its third Interim Decision 2010 HRTO 614 which reads in part at paragraphs 9 and 10:

9On January 19, 2010 the Tribunal received further correspondence from the applicant, attaching news articles regarding the respondent emerging from bankruptcy on November 9, 2009. The applicant confirmed he delivered a copy of the correspondence to the respondent on January 26, 2010.

10In the circumstances, it appears that there is no longer an Order of the Court, pursuant to the CCAA, staying or suspending the proceeding. The respondent is required to provide a Response (Form 2) to the Application within 35 days of the date of this Interim Decision.

7The respondent appears to not have copied the Tribunal with its correspondence to the applicant dated February 8 and March 3, 2010 which sets out the respondent’s position as to why it is that the applicant’s claim is barred. In the alternative relief sought the respondent has asked that the Tribunal reconsider its March 22, 2010 Interim Decision with the benefit of the respondent’s submissions.

Discussion

8In short, the respondent’s submission to dismiss is that, in the cross-border court supervised insolvency proceedings of Lear Corporation there was an approved claims process, and that, while the applicant received notice of the claims, process he failed to file a claim in that proceeding. As result, the respondent argues, the applicant is now barred from proceeding with this Application as it should have been dealt with in the insolvency.

9In Rijal v. Distinctive Designs Furniture, 2009 HRTO 297 I found that the bankruptcy legislation provides a protocol and management of various claims against those seeking protection under the Bankruptcy and Insolvency Act R.S., 1985, c. B-3, s. 1; 1992, c. 27, s. 2. The claims process and stay provisions of the BIA provide a protocol to allow for the effective management of insolvent individuals. As the Supreme Court recognized in GMAC Commercial Credit Corporation – Canada v. T.C.T. Logistics Inc., 2006 SCC 35, [2006] 2 S.C.R. 123

Trustees, receivers and the specialized courts by which they are supervised, are entitled to a measure of deference consistent with their undisputed expertise in the effective management of a bankruptcy. Flexibility is required to cure the problems in any particular bankruptcy. But guarding that flexibility with boiler plate immunizations that inoculate against the assertion of rights is beyond the therapeutic reach of the Bankruptcy and Insolvency Act.

10While in Rijal I was speaking about the BIA, the logic applies equally to the CCAA with the recognition that the CCAA relies more on an internal claims resolution processes which usually include claims bar dates and claims bar orders. It is only by closing all claims through a claims bar process that a restructured company can emerge free of its liabilities.

11The entire purpose of the CCAA is to provide a mechanism for corporations to restructure and emerge free of pre-filing liabilities. The way this is done is that all claims against the insolvent entity are filed with the monitor who in turn allows, varies or refuses the claim. If a claim is refused or varied the claimant has the ability, within the claims process established by the supervising court to appeal that claim. Appeals, at least in Ontario, are usually to a claims officer appointed by the court but may also be to the court directly, or in appropriate circumstances, when consent or an order of the court is obtained, by another tribunal or court. Once a claim is proven the creditor then receives their pro rata share of any dividend that is obtained as part of the restructuring. However, all of this is predicated on creditors making a claim in the CCAA.

12The Lear matter is slightly more complicated in that it was a cross-border insolvency with the claims process being established and supervised by an American court. However, the Ontario Superior Court of Justice did issue the appropriate orders recognizing the claims process for all creditors including the applicant.

13The respondent asserts the applicant received the proper notice of the claims process. The applicant in his submissions claims that he did not and directs the Tribunal to the delivery sheet showing a claimant with his name but a different address. From this is it maybe that the applicant did not in fact have actual notice of the claims proceedings. However paragraphs 16 and 18 of the Order Setting Bar Dates reads as follows:

16. Pursuant to Bankruptcy Rule 2002(f), the Debtors shall publish notice of the Bar Dates in substantially the form attached to this Bar Date Order (the “Publication Notice”) once in the Wall Street Journal, The Globe and Mail (national edition) and The Detroit Free Press shortly after the entry of the Bar Date Order approving this Motion and in no event later than September 6, 2009.

17. Notice as set forth in this Bar Date Order and in the manner set forth herein (including but not limited to, Bar Date Notice, Bar Date Package, the Publication Notice and any supplemental notices that the Debtors may send from time to time) constitute adequate and sufficient notice…(emphasis added).

As a result it would appear that, even if the applicant did not get a copy of the claims materials in the mail from the respondent or its counsel the publication of the notice in the Globe and Mail was deemed to be sufficient for the purposes of notice of the claims process.

Decision

14It is always available to the applicant to bring a motion before the Ontario Superior Court of Justice, Commercial List for leave to file a late claim. However, in the absence of such an order allowing for the late filing of the claim in the CCAA proceeding I am of the view that the Tribunal has no jurisdiction to hear a claim that is barred by court order. The applicant has 30 days from the date of this Interim Decision to advise the Tribunal of his intent to bring a motion to the Superior Court. If the applicant fails to bring such a motion the Application may be dismissed as abandoned.

15I am not seized.