Natasha MacParland

Her Majesty the Queen in right of Ontario sought to lift a stay on its $330 billion health care cost recovery action against three tobacco companies (JTI-Macdonald Corp., Imperial Tobacco, Rothmans, Benson & Hedges Inc.) and eleven co-defendants, which was imposed under CCAA proceedings.

Ontario proposed to temporarily stay the effects of any judgment.

The court dismissed the motion, emphasizing the need to preserve the status quo in CCAA proceedings to facilitate a global resolution of significant claims.

Allowing Ontario's action to proceed would alter the level playing field, distract from restructuring efforts, and impose significant costs, prejudicing other stakeholders.

The applicant, a secured creditor, applied to adjudge the respondent bankrupt and sought a declaration that its perfected security interest under the Personal Property Security Act took priority over class counsel's first charge under the Class Proceedings Act regarding a $3 million costs award.

The court adjudged the respondent bankrupt and found the costs award was the respondent's property.

However, the court held that the first charge under the Class Proceedings Act is essentially a solicitor's lien, which is exempt from the Personal Property Security Act.

Therefore, class counsel's charge takes priority over the applicant's secured claim.

The moving party, Zayo Inc., previously had its motion dismissed.

The motion sought an order for the Monitor to pay Zayo $1,228,799.81 from the proceeds of the sale of the applicants' assets.

In this costs endorsement, Zayo argued that costs are not the norm in CCAA proceedings.

The court disagreed, finding this to be an exceptional case where the normal rule of costs should apply, as the real opponents (the secured lenders and the purchaser) were not insolvent.

The court awarded costs against Zayo, fixing them at $30,000 each for Primus and BMO, and $20,000 each for Birch and the Monitor.

This endorsement addresses the costs arising from a prior motion where Fishman Flanz Meland Paquin LLP (FFMP) was successful against FCA Canada Inc. (Chrysler).

FFMP claimed costs of $138,923.68, while Chrysler argued for no more than $50,000.

The court considered the complexity of the motion, the importance of the matter to FFMP, and Chrysler's unreasonable position.

The court assessed FFMP's fees at $85,000 and disbursements at $2,698.47, plus applicable taxes, to be paid by Chrysler within thirty days.

Zayo Inc. brought a motion seeking an order for FTI Consulting Canada Inc., as Monitor for the Primus Entities, to pay Zayo $1,228,799.81 from asset sale proceeds.

This amount represented pre-CCAA filing arrears owed to Zayo under contracts assigned to Birch Communications Inc. Zayo argued the consent process for assignment was not transparent or fair, alleging it was misled into consenting without realizing it could have leveraged Section 11.3(4) of the CCAA to demand full payment of arrears.

The court dismissed the motion, finding the consent process fair and transparent, noting Zayo's sophistication and lack of due diligence.

The court also found that granting the order would cause prejudice to secured lenders and Birch, as it would require varying existing orders and disrupt a closed transaction.