DATE: 20050304
COURT OF APPEAL FOR ONTARIO
LASKIN J.A. (in chambers)
IN THE MATTER OF THE COMPANIES’ CREDITORS ARRANGEMENT ACT, R.S.C. 1985, c. C‑36, AS AMENDED AND IN THE MATTER OF A PROPOSED PLAN OF COMPROMISE OR ARRANGEMENT WITH RESPECT TO STELCO INC. AND THE OTHER APPLICANTS LISTED IN SCHEDULE ‘A’
APPLICATION UNDER THE COMPANIES’ CREDITORS ARRANGEMENT ACT, R.S.C. 1985, c. C‑36, as amended
Jeffrey S. Leon and Richard B. Swan for the moving parties
Michael Woollcombe and Roland Keiper
John R. Varley for the Stelco and Subsidiaries Salaried Employees Association
Alfred J. Esterbauer and Andrew J. Hatnay for the retired salaried beneficiaries of Stelco Inc., CHT Steel Company Inc., Stelpipe Ltd., Stelwire Ltd. and Welland Pipe Ltd.
Sharon L.C. White for the United Steelworkers of America Local 1005
Kenneth T. Rosenberg for the United Steelworkers of America
David P. Jacobs and Michael C.P. McCreary for the United Steelworkers of America Local Union 8782 and Local Union 5328
Robert I. Thornton for Ernst & Young Inc., in its capacity as monitor of the applicants
Peter H. Griffin for the Stelco Inc. Board of Directors
Heard: March 3, 2005
LASKIN J.A.:
1On February 25, 2005, Farley J. made an order removing two directors – Michael Woollcombe and Roland Keiper – from the Board of Stelco. Woollcombe and Keiper have sought leave to appeal this order. They now seek an order expediting the hearing of their leave motion, directing that it be heard orally, and if leave is granted, directing that the appeal be heard at the same time.
2In ordering Woollcombe’s and Keiper’s removal from the Board, Farley J. found no impropriety on their part. He was concerned, however, that because the corporations Woollcombe and Keiper represent had accumulated a significant number of Stelco shares, their objective might be to “maximize shareholder value”, and not to act in the best long-term interests of the company. He ordered their removal under what he said was his “inherent jurisdiction and the discretion given to the court pursuant to the CCAA”. I make no comment on the merits of the leave motion other than to say it is arguable, not frivolous. The sole issue before me is whether the motion and the appeal are sufficiently urgent that they should be expedited, instead of being heard in the ordinary course. Under the court’s current timelines, the “ordinary course” would see the leave motion dealt with in early April and, if leave is granted, the appeal heard in the late summer or early fall.
3None of the other stakeholders support the motion to expedite. The Stelco Board, however, stresses that the Board needs certainty to function effectively. The workers – represented by the salaried retirees (who brought the removal motion before Farley J.), the United Steelworkers of America, two United Steelworkers locals, and the salaried employees – oppose this motion to expedite. They contend that the leave motion is not urgent. They argue that because after Farley J.’s order the Board rejected the capital raising proposals put before it, the “critical phase” relied on by Woollcombe and Keiper has passed. They also argue that Woollcombe and Keiper are pursuing a personal grievance now not supported by Stelco itself, and that the restructuring process under the CCAA proceedings is unaffected because the Stelco Board continues to function.
4Although these arguments have merit, I have decided to grant the order to expedite. I do so for these reasons:
- CCAA proceedings are invariably fast-moving, and often unpredictable. In this context, the court should strive where it can to achieve a measure of stability and certainty. To me, that means taking a generous view of “urgency”. Indeed, if “real time” litigation – the speedy handling of restructurings – is to be meaningful, it must occur not just in the “commercial list”, but also in this court when rulings affecting the restructuring are challenged. Otherwise, the corporate community, the commercial bar and the public will lose confidence in the ability of this court to deliver justice.
- Although one critical phase of the Stelco restructuring may have passed, the Board has already moved into yet another “critical phase”. It is now directly and “aggressively” pursuing its own financing options. Inevitably, the Board will be making ongoing decisions affecting the restructuring process. The Stelco Board ought to know quickly whether Woollcombe and Keiper are going to play a role in that decision-making. I agree with the submission of Mr. Griffin, counsel for the Board, that the Board needs certainty. On the question of the Board’s composition, that certainty can best be achieved by granting the order to expedite.
- A related point is that, although the Board can certainly function and make decisions without Woollcombe and Keiper, the Board itself had sought their contributions to the process and had unanimously approved their appointments. Whether they will continue to take part in decisions concerning Stelco’s restructuring should be resolved sooner rather than later. Delay, in my view, may adversely affect the restructuring process.
- The dispute in issue here is not one that can be resolved down the line by the payment of money. This is a dispute over who is going to participate in important decisions affecting the restructuring of one of Canada’s major steel producers. If Woollcombe and Keiper are entitled to a voice in these decisions, that should be resolved quickly. Otherwise, irreversible decisions may be made without their participation.
- The workers brought their motion to remove Woollcombe and Keiper on an urgent basis. That urgency does not disappear because the workers obtained the order that they wanted.
5For these reasons, I grant the motion to expedite. The motion for leave to appeal, and if leave is granted, the appeal will be heard orally before Goudge, Feldman and Blair JJ.A. on Friday, March 18, 2005 from 9:00 a.m. to 12:30 p.m. Blair J.A. – or, in his absence, Goudge J.A. – has agreed to case manage any matters arising in the interval. Subject to his direction, the time for argument shall be divided equally between the moving party (and any supporters) and those parties opposing the motion. The moving party shall file all of its materials, including its factum, by Tuesday, March 8, 2005. The responding parties shall file their material by Friday, March 11, 2005. If the moving party wishes to file a reply factum on the leave motion, it shall do so by Monday, March 14, 2005. The costs of this motion are reserved to the panel on March 18, 2005.
6Lastly, I repeat what I said in open court: for those counsel with young children, I regret that the March 18th date comes in the middle of Spring Break. That day, however, was the only realistic date the court had available for an urgent hearing of this duration. I thank all counsel for their submissions.
Released: MAR 04 2004 Signed: “John Laskin J.A.”