James Harnum

The Body Shop Canada Limited (TBS) brought a motion seeking an extension of the Companies' Creditors Arrangement Act (CCAA) stay, a declaration that the UK Purchaser is a critical supplier, the granting of a critical supplier charge over inventory up to $1.5 million, and approval of charge priorities.

The Court-appointed Monitor supported the relief.

Certain terminated employees did not oppose the relief but requested a shorter stay extension and information for a liquidation analysis to explore WEPPA benefits.

The court granted all relief sought by TBS, finding the UK Purchaser to be a critical supplier essential for TBS's continued operations and the ongoing sale process.

The critical supplier charge was deemed appropriate and non-prejudicial.

The requested stay extension was found reasonable and necessary, and the employees' request for a shorter extension and liquidation analysis was denied as inappropriate at this stage.

A former employee of The Body Shop Canada Limited brought a motion in the company's bankruptcy proceedings seeking to be appointed as the Representative for all terminated Canadian employees, and to have her counsel appointed as Representative Counsel.

The moving party sought an order that included a mandatory opt-out mechanism and broad immunity from liability for the Representative and Representative Counsel.

The court dismissed the motion, finding that the claims of the terminated employees were relatively straightforward, the class was small and easily identifiable, and the proposed opt-out mechanism and broad immunity were inappropriate in the circumstances.

The Ontario Superior Court of Justice (Commercial List) heard two motions within a long-standing Companies’ Creditors Arrangement Act (CCAA) proceeding concerning U.S. Steel Canada Inc. (now Stelco Inc.).

Stelco Inc. sought approval for a Securities Purchase Agreement (SPA) to acquire the remaining ownership interest in a Land Vehicle from various Stakeholders (employees, retirees, pensioners).

DGAP Investments Ltd., a defendant, brought a cross-motion seeking a strict timetable for the completion of a separate land sale agreement (DGAP Sale Agreement) before the SPA could close, alleging bad faith by Stelco.

The court granted Stelco's motion, finding the SPA beneficial to the Stakeholders by providing immediate monetization and extricating them from ongoing litigation.

DGAP's motion was dismissed, as the court found no evidence of bad faith by Stelco sufficient to delay the SPA, and determined that the SPA and DGAP Sale Agreement were not mutually exclusive.

The court emphasized continued judicial supervision and the Monitor's role in future transactions.

In a CCAA proceeding, the court considered supplementary written submissions regarding the appropriateness of differential consideration offered to unsecured creditors in the proposed Plan.

The court accepted the applicants' submission that the fairness of the differential consideration, which involves providing shares to Term Loan Lenders and cash to General Unsecured Creditors, should be determined at the Sanction Hearing rather than at the Meetings Order stage, given the low threshold for a Meetings Order and the presence of conflicting expert reports.

The Applicants sought an Authorization Order and Meetings Order under the CCAA.

The primary issues in dispute concerned the voting rights and classification of Litigation Claimants, which included uncertified U.S. class actions, a certified Ontario class action, and Texas mass tort claims.

The court held that the Litigation Claimants are creditors entitled to vote, but restricted them to one vote per action to prevent them from overriding other stakeholders on numerosity grounds.

The court also ordered summary proceedings to value their claims rather than accepting the Applicants' proposal to value them at $1.

Finally, the court declined to place the Term Loan Lenders in a separate class from other unsecured creditors, finding sufficient commonality of legal interests.

The plaintiff brought an omnibus motion to implement a Court of Appeal judgment in favour of a class of over 35,000 retirees regarding pension indexation.

The court approved the implementation methodology, which provides an estimated $103 million present value recovery to the class.

The court also approved class counsel fees of $10 million, a $15,000 honorarium for the representative plaintiff, and the Class Proceedings Fund levy.

Finally, relying on section 12 of the Class Proceedings Act, the court eliminated the right of class members to opt out, finding that the declaratory nature of the judgment and the 100% recovery made an opt-out right unnecessary and potentially unjust.

The Court of Appeal for Ontario refused leave to appeal a sealing order issued by a CCAA supervising judge in the Laurentian University insolvency proceedings.

The moving parties, including faculty unions, sought access to confidential documents (letters between Laurentian and the Ministry of Colleges and Universities) that were sealed to protect restructuring efforts.

The Court applied the Sierra Club test for sealing orders and the four-factor test for leave to appeal in CCAA cases, finding the proposed appeal was not prima facie meritorious, would unduly hinder the time-sensitive restructuring, and was not of sufficient significance to the action.

The court emphasized deference to the supervising judge's discretion in complex CCAA matters.

This supplementary endorsement addresses a challenge to a sealing order granted in the Companies’ Creditors Arrangement Act (CCAA) proceedings of Laurentian University of Sudbury.

The sealing order covered confidential correspondence between the University and the Ministry of Colleges and Universities, which Laurentian University argued contained sensitive information that, if disclosed, could jeopardize its restructuring efforts.

Parties opposing the sealing order contended there was no evidentiary basis for it.

Applying the two-branch test from Sierra Club of Canada v. Canada (Minister of Finance), the court found that the disclosure posed a real and substantial risk to the University's future viability, that the "commercial" interest extended to the broader community, and that no reasonable alternatives existed given ongoing mediation.

Consequently, the court maintained the confidentiality of the exhibits and the existing sealing order.

The union sought leave to proceed with a certification application and unfair labour practice complaint before the Ontario Labour Relations Board following the appointment of a receiver over the debtor company.

The motion judge dismissed the union's motion, finding that the stay imposed by the receivership order prevented the certification application from proceeding and that the union could not pursue an unfair labour practice complaint without a valid certification application.

The Court of Appeal allowed the appeal, holding that the motion judge erred in refusing to lift the stay.

The court found that the motion judge's concerns about the certification application were speculative and unsupported by evidence, and that employees' labour rights should not be unduly inoculated against by insolvency proceedings.

The court granted leave to proceed with both the certification application and the unfair labour practice complaint.

One hundred and fifteen former Nortel employees brought a motion seeking to impose personal liability on the former directors of Nortel Networks Limited (NNL) and Nortel Networks Corporation (NNC) for unpaid severance payments under section 119 of the Canada Business Corporations Act (CBCA).

The employees argued that the severance payments were akin to retention payments for services performed.

The directors raised defenses including that severance payments are not covered by section 119, they exercised due diligence, and some claimants were employed by a different subsidiary (NNTC).

The court dismissed the motion, finding that severance payments are not for 'services performed' under CBCA s. 119, but rather compensation for loss of employment.

The court also found that the directors had a valid due diligence defense and that the 'true employer' test would have identified NNL as the employer for all employees, despite payroll being handled by NNTC.

The court also noted that releases signed by some employees would have covered the claim.

The Ontario Nurses Association (ONA) brought a motion under the CCAA seeking an order to restructure the Victorian Order of Nurses for Canada (VON Canada) pension plan.

The ONA proposed transferring assets and liabilities related to VON Ontario employees into a new pension plan and sought a declaration that VON Ontario was not jointly and severally liable for any pension deficits.

The court dismissed the motion, finding that the ONA's proposal did not advance the CCAA's policy objectives of fostering going concern restructuring and avoiding liquidation.

The court also applied the business judgment rule, deferring to VON Canada's board decision to maintain the status quo, and deemed the request for a declaration on future liabilities premature and speculative.

The Minister of Education brought a Stated Case asking the Divisional Court to determine whether the Education Act permits school boards to pay for life insurance and health benefits for retired employees over 65 years of age.

The Minister argued that the Act only permits payments to current employees and that specific statutory authority is required for such expenditures.

The Court held that while ss. 177(3) and 177(4) do not authorize these payments, other sections of the Act, including ss. 58.5(1), 170(1)18, 171(1)3, and 177(1), when read together and in context, provide the necessary authority.

The Court found that school boards have the power to negotiate and pay for post-retirement benefits as part of employee compensation packages.

The International Union of Operating Engineers, Local 793 (the "Union") brought a motion seeking to lift a stay of proceedings imposed by a receivership order.

The Union intended to proceed with a certification application and a related unfair labour practice complaint before the Ontario Labour Relations Board (OLRB) against Courtice Auto Wreckers Limited (the "Debtor") and its court-appointed receiver, Rosen Goldberg Inc. The court denied the motion, finding that the certification application was a nullity as it was commenced without prior leave of the court, in contravention of the receivership order.

Consequently, the unfair labour practice complaint, being dependent on the validity of the certification application, also lacked a prima facie basis.

The court emphasized that allowing the certification would create new rights for employees, contrary to the purpose of a stay in receivership, and could diminish the proceeds from the sale of the Debtor's assets.

In proceedings under the Companies’ Creditors Arrangement Act arising from the insolvency of a payday lending enterprise, class members moved for approval of settlement administration measures related to consumer class action settlements.

The requested approvals included a settlement distribution protocol, notice plan, privacy and information management protocol, and appointment of a claims administrator.

A third‑party creditor that had purchased loan receivables from the debtor sought accommodation to assert an equitable set‑off against class members’ settlement recoveries.

The court held that the creditor’s claim lacked the close connection required for equitable set‑off and was effectively a prejudgment garnishment against settlement funds.

The administrative protocols were approved as fair, reasonable, and in the best interests of class members.

In CCAA proceedings involving a payday lending enterprise, class members in Ontario consumer class actions moved for approval of three settlement agreements forming part of a broader global resolution of litigation involving the debtor companies, their directors and officers, and related parties.

The settlements resolved certain class claims and partially resolved a third‑party lender claim, providing more than $10 million in recovery with potential participation in future litigation proceeds.

The court applied established settlement approval factors including likelihood of success, litigation risks, counsel recommendations, absence of objections, and arm’s‑length negotiations.

The court concluded that the settlements were fair, reasonable, and in the best interests of the class and the restructuring process.

In CCAA proceedings involving a payday lending group, class counsel for Ontario consumer class actions sought court approval of contingency fees and disbursements following settlement of related class proceedings.

The settlements produced monetary recoveries exceeding $10 million for class members, with potential additional recovery from future litigation proceeds.

The court reviewed the reasonableness of the requested 25% contingency fee and disbursements using established factors including results achieved, litigation risk, and responsibility assumed by class counsel.

The motion was unopposed.

The court concluded the requested fees and disbursements were reasonable and approved the amounts.

The Receiver brought a motion to distribute funds to the secured creditor, RBC, and to approve its fees.

The Union opposed, claiming a super-priority for unpaid pension and other benefits under the BIA over all companies in the receivership, and sought to claw back the Receiver's fees.

The court held that the CRA's deemed trust for unremitted source deductions under the Income Tax Act takes priority over the Union's BIA super-priority claims.

The court also rejected the Union's attempt to extend its claims to other corporate entities in the group, finding no evidence they were related employers or participated in the pension plan.

The Union's attempt to claw back the Receiver's fees was dismissed as an impermissible collateral attack.

The proposed interveners, two unions, brought motions for leave to intervene in an application for judicial review concerning the payment of post-retirement benefits by a school board.

The judicial review was scheduled to be heard immediately after a related Stated Case in which both proposed interveners were already participating.

The court dismissed one union's motion to intervene, finding it could efficiently make its arguments in the Stated Case proceeding without prolonging the judicial review.

However, the court added the other union as a responding party because it was a joint signatory to the collective agreement at issue in the underlying arbitration.

The moving parties, representing non-union active employees and retirees of a company in separate CCAA proceedings, sought leave to intervene in an appeal after oral arguments had concluded and judgment was reserved.

The appeal involved issues under the Pension Benefits Act and the Personal Property Security Act that could significantly impact the moving parties' interests.

The Court of Appeal granted the motion to intervene, finding the moving parties would provide a useful perspective.

To prevent injustice, the intervention was limited to existing issues and the record, and the moving parties were ordered to pay the responding party's reasonable costs for responding to their factum.

The applicant transit authority sought court approval of a negotiated settlement in a class proceeding concerning entitlement to proceeds arising from the demutualization of a life insurance company that issued group life insurance policies to employees and retirees.

The settlement provided that approximately 62% of the proceeds would be distributed to eligible employees and retirees and the remainder to the employer, with deductions for distribution and legal costs.

The court applied the established test under the Class Proceedings Act, 1992 for approving class action settlements and considered factors including fairness of allocation, litigation risk, negotiation process, notice to class members, and absence of objections.

The court concluded that the settlement was fair, reasonable, and in the best interests of the class and approved the distribution scheme and related legal and administrative fees.

Ancillary orders were granted permitting sharing of contact information for distribution purposes and sealing the final list of eligible recipients to protect personal information.