Re Gilmore Printing Services Inc.

Court File No.: C36133

Hearing Date: Friday, November 16, 2001

Panel: Weiler, Feldman and Sharpe JJ.A.

Counsel: Matthew Halpin for the appellant, respondent by cross-appeal, TaxSave JP Telfer for the respondent, appellant by cross-appeal, Gilmore

Endorsement

In our opinion the motions judge was correct in concluding that B.W. Graphics' agreement to pay 50% of any tax savings it received to TaxSave for its work in obtaining the refund was intended to be transferred through to Gilmore Printing. When Gilmore Printing entered into a plan of arrangement under the CCAA, contingent claims were expressly carved out and were not compromised by the Plan. The motions judge erred in treating TaxSave as an ordinary unsecured creditor entitled to a distribution provided to other ordinary unsecured creditors of 33 cents on the dollar for its claim and not as a contingent claimant. There were no other claimants to the fund comprising the tax refund received by Gilmore. The other creditors claims had all been satisfied. There is a link between the work done to create the property and the creation of the property in this case. The other unsecured creditors are in a different situation. In view of our conclusion it is not necessary to deal with the other arguments advanced by the appellant concerning its entitlement to an equitable remedy. Accordingly,the appeal is allowed and the cross-appeal is dismissed. Paragraph 3 of the motion judge's Order is deleted and the following is substituted therefore:

TaxSave is entitled under the Plan to a distribution equal to its entire fifty percent (50%) claim to the Refund after the costs of the Implementor have been deducted.

The costs of the appeal and of the cross-appeal are to TaxSave.