Johanne Braden

Following the release of its decision on the appeal, the Court of Appeal for Ontario issued a costs endorsement.

The parties agreed that costs should follow the event but left the determination of the quantum to the court.

The court fixed costs in the amount of $15,000 all-inclusive, payable by the respondent to the appellants.

The appellants, bondholders of BC Tel (predecessor to Telus), appealed a trial decision finding that BC Tel did not breach a 'no financial advantage covenant' when it redeemed bonds using proceeds from a securitization transaction.

The covenant prohibited redemption using funds obtained directly or indirectly through borrowings with an interest cost less than 11.35%.

The Court of Appeal allowed the appeal, holding that while the securitization involved a 'true sale' of accounts receivable, the transaction as a whole functioned to raise capital from the public.

Thus, the proceeds applied to redeem the bonds constituted funds indirectly obtained through borrowings at an interest cost to the company of less than 11.35%, violating the covenant.