Indalex Limited (Re)

CITATION: Indalex Limited (Re), 2011 ONCA 578

DATE: 2011-09-07

DOCKET: C52187 & C52346

COURT OF APPEAL FOR ONTARIO

MacPherson, Gillese and Juriansz JJ.A.

BETWEEN

In the Matter of the Companies’ Creditors Arrangement Act, R.S.C. 1985, c. C-36, as amended

And in the Matter of a Plan of Compromise or Arrangement of Indalex Limited, Indalex Holdings (B.C.) Ltd., 6326765 Canada Inc. and Novar Inc.

Applicants/Respondents

Counsel:

Andrew J. Hatnay and Demetrios Yiokaris for the Former Executives, appellants

Darrell L. Brown for the United Steelworkers, appellants

Mark Bailey for the Superintendent of Financial Services

Hugh O’Reilly and Adam Beatty for Morneau Sobeco Limited Partnership, Intervenor

Fred Myers and Brian Empey for Sun Indalex Finance, LLC

Ashley Taylor and Lesley Mercer for the Monitor, FTI Consulting Canada ULC

Harvey Chaiton and George Benchetrit for George L. Miller, the Chapter 7 Trustee of the Bankruptcy Estates of the US Indalex Debtors

On appeal from the orders of Justice Colin Campbell of the Superior Court of Justice, dated February 18, 2010.

COSTS ENDORSEMENT

[1] The court released its reasons for decision in this matter on April 7, 2011 (the Decision). In the Decision, the court indicated that if the parties were unable to agree on costs, they could make brief written submissions on the same. Despite extensive efforts to settle costs, no settlement was reached and the parties duly made written submissions. This endorsement follows due consideration of those submissions.

[2] Morneau Shepell Ltd., the Ontario Superintendent of Financial Services and the Retirees reached an agreement in respect of the payment of the Retirees’ legal fees and disbursements. The court approves the agreement. Therefore, it orders that:

i. the Retirees’ full indemnity legal fees and disbursements in the amount of $269,913.78 shall be paid from the fund of the Executive Plan attributable to each of the 14 Retirees’ accrued pension benefits. Specifically, such costs shall be allocated among the 14 Retirees in relation to their pension entitlement from the Executive Plan and will not be borne by the other three members of the Executive Plan, who are not appellants;

ii. the $269,913.78 amount shall be paid to Koskie Minsky LLP in trust on the first day of October, 2011;

iii. the costs of these proceedings ordered in favour of the Retirees shall be paid to the fund of the Executive Plan and once received, the amount shall be allocated among the 14 Retirees in relation to their pension entitlement from the Executive Plan.

[3] The USW sought an order to the same effect in respect of the Salaried Plan. We decline to make that order because the USW is in a materially different position than the Retirees. The Retirees are beneficiaries of the pension fund. The individual represented Retirees, who comprise 14 of 17 members of the Executive Plan, have consented to the payment of costs from their individual benefit entitlements. Those who have not consented will not be affected by the payment. By contrast, the USW is the bargaining agent (not a beneficiary) for only 7 of the 169 beneficiaries of the Salaried Plan, none of whom have been given notice of, or consented to, the payment of legal costs from the Salaried Plan. It is also significant that we are not dealing with surplus pension funds as the Salaried Plan is underfunded.

[4] We make no order as to costs of the underlying motions. We understand that the conventional approach in CCAA proceedings is to rarely make costs orders, with the result that each party bears its own costs. There are sound policy reasons that underlie this approach, which include the reality that as a result of the situation of the insolvent company, the amount of funds available for distribution is limited and parties ought not to expect to recover their litigation costs: see Canadian Asbestos Services Ltd. v. Bank of Montreal, [1993] O.J. No 1487, at para. 31 (Gen. Div.) and Re Calpine Canada Energy Limited, [2008] A. J. No. 965, at para. 1. We see no reason to depart from the usual practice.

[5] As for costs of the appeal, we make no order for or against the Monitor due to its prior agreement with the Retirees and the USW in which the parties agreed not to claim against one another for the costs of the leave to appeal motion or the appeal.

[6] The Retirees argue that the court should award costs of the motion for leave to appeal, the motion for intervenor status and the appeal on a substantial or full indemnity basis. We see no reason to depart from the court’s normal practice of awarding costs on a partial indemnity basis.

[7] Thus, the Retirees and the USW, as the successful parties, are each entitled to their costs on a partial indemnity basis from Sun Indalex and the U.S. Trustee, payable jointly and severally. We fix those costs at $40,000, inclusive of applicable taxes and disbursements. The payment of costs in favour of the Retirees shall be done in accordance with para. 2(iii) above.

[8] In making this order, we are mindful of the submissions of Sun Indalex and the U.S. Trustee that any costs award should be payable by the Canadian Debtors [Indalex]. However, we are not persuaded that we should depart from the usual practice in which the unsuccessful parties pay the costs of the successful parties.

[9] Orders to go in accordance with these reasons.

“J.C. MacPherson J.A.”

“E.E. Gillese J.A.”

“R.G. Juriansz J.A.”